Who Is And Isn't Saving For Retirement

Tyler Durden's picture

In the land of the free and the home of the entitled, the sad (but true) nature of income inequality's inexorable rise in the past few years has a somewhat more startling impact on the future. With work being punished for the marginal employee and the wealth effect concentrated in the hands of the great and good, the following two charts show clearly the sad fact that those who need to save for the future the most don't (and likely can't) and those with all the income save the most (and thus 'spend' the least). As we noted previously, the rich have the assets and the poor have the debt (and debt is not wealth).


As MarketWatch's Matthew Heimer notes, a recent study shows that 36% of Americans had saved $1,000 or less for retirement.

The following charts show just how intensely the problem of scanty retirement savings is concentrated among lower earners.


Among households that earn less than $25,000 a year, around 75% have less than $1,000 saved, and almost 95% have less than $25,000.


Once you get to the middle income range, the outlook brightens a little: About half of all households earning between $50,000 and $75,000 have at least $25,000 put away, and around 20% of that group have saved at least $100,000.


Among six-figure earners, as you’d expect, the retirement balances look healthier still: More than 40% have saved at least $250,000, and 10% have saved at least $1 million.




Of course, just because you’re earning well doesn’t mean you’re saving much; about 12% of this high income group has saved less than $25,000 for retirement. 



So there it is - those that need to save can't (or won't) and those that don't need to save do... so why again is Fed policy aimed at pumping up the assets of the wealthy (who are relative over-savers and under-consumers) in an economy reliant on the marginal consumer to bring home the bacon for everyone?


As we noted previously,


Why is it important? Simple - contrary to the Fed's flawed DSGE models, it is the poor who
are more likely to consume. And logically with their purchasing power
being funneled to the rich with every additional billion in monthly debt
monetization, they purchase less and less. As the slow but steady contraction in the economy over the past five years has proven beyond a reasonable doubt.

But hey: at least Hamptons' houses have never been more expensive and the Russell 2000 keeps on hitting daily all time highs. Thank you "wealth effect."


Source: Marketwatch

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zorba THE GREEK's picture

Fuck the PM manipulators, full speed ahead.

DoChenRollingBearing's picture

Even those with low incomes should buy gold if they have children.  Saving CA$H is OK in addition.  Should save both.  It is not that hard to do even on a very limited income.

Saving ANY wealth is better than saving NONE.

Those without children (or are sure they will have none) can skip this advice if they have no heirs or loved ones (nephews, nieces, etc.).

The Dunce's picture

I'm not saving for retirement.  I'm a broke dead dick.  Bitches.

DoChenRollingBearing's picture

The Dunce writes a good blog!  But that does not mean I can´t hop aboard that train too...  Besides, I would guess tha Korea imports Peru´s gold (first link) and their other metals (second),  But in return, we buy Korean bearings...

LOL, fishez!




manofthenorth's picture

Nunber of Americans saving in ounces instead of Dollars ???

LESS than 2% ?

ZHers are 1% ers !!!


Pool Shark's picture



Why should the FSA save anything?

After all, Obama and the progressives have promised them Social Security, ObamaCare, ObamaPhones, Food Stamps, Section-8 Housing...

Not surprising when Obama's administration leads by example:


At the time of her appointment to the Supreme Court in 2009, after a 25-year legal career, including 17 years as a federal judge earning nearly $200,000 a year, Justice Sotomayor had no retirment savings, no stocks or bonds, and a personal savings account worth only $31,000, but had credit card and dental bills nearly as high.

Why shouldn't she spend every penny she makes; after all, she's guaranteed a life-time federal pension equal to her final salary as a federal judge.

A perfect object lesson for the progressive big-government crowd...


justsayin2u's picture

Sotomayor sounds like an average middle class person today - she spends every dime she has, uses home equity plus salary and credit, and feeds every material desire she has.  Save money - not so much.  So how prudent is this person - not so much.  How about this person's self-control - not so much.  Why would we trust her judgement if she can't control herself?

rbg81's picture

It's funny.  I have met many people who are super sharp/smart in their professional life.  But, when you start to talk personal finances, the majority of these seem to be absolute dunces.  Never understood that disconnect.

headhunt's picture

I have found a similar pattern including they are very self centered and selfish.

StandardDeviant's picture

Daniel Kahnemann's "Thinking, Fast and Slow" goes a long way towards explaining our often irrational behaviour, especially when it comes to investing and risk.  Basically, our brains are great at survival, not so great at statistics and probability.

Lack of financial education is probably also a factor.  Don't know about you, but my grade school didn't teach so much as how to balance a chequebook, let alone manage investments, credit, and so on.  Kids are expected to learn it all the hard way, I guess.

Svener's picture

No, I don't think kids are expected to learn the hard way...um, I think it's referred to as "Parents".  Expecting our schools to teach kids about everything is crazy.  We taught our daughter responsibilities (vote, serve jury duty, obey the law, use your common sense in all things, pay your bills, replace the furnace filter, change your flat tire, change the oil, mow the lawn, pay your taxes, show up for work and do your best (be a part of the solution), write a check, whole life insurance vs. term life insurance, boys (small apes), treat animals kindly, That was our responsibility, to teach about life.  Not the school system.  And if there is something we missed.  Oh for crying out loud, use your brain and research it.

exi1ed0ne's picture

We homeschool, which means our income is cut in half.  I refuse to put money into a 401K or any other paper promise that can be mugged by wall street which is what most of these charts represent.  Most of what I make goes into pure maintinence of our house, kids, educational supplies, and taxes (45-50% direct taxation of labor, property tax, sales tax, etc).  I make OK money, but my largest investment is in my kids.  I have zero illusions that there will ever be the opportunity to retire in any form, and I will not collect assets for the medical industry to plunder when something goes wrong and the Dr decides to ignore my wishes and save me no matter the cost. 

My retirement plan is doning milkbone underware witha gravy bath and wander out into the woods rather then be a burden on my family.  Fuck the financial system.  I refuse to participate any more then I have to.  I'm never going escape, but I'm damn sure gonna give my children the best of all possible shots to do so.  THAT is REAL investment.

StandardDeviant's picture

No, you're a blog-pimping sock puppet account.  Go away.

zorba THE GREEK's picture

Must be something brewing, they are trying extra hard to beat down the price of PMs.

Thursday futures expiration? Or maybe something bigger, like an immanent attack of Iran or Syria

by the Joos.

LetThemEatRand's picture

Good thing we don't have shared pensions.  At least a few percent of the $100K+ earners can live on their savings after they retire.  For a year or two.

kliguy38's picture

hehehehe.........yeah ain't dat da truth..........fochin' joke......and wait til they dunk the dollar on um.......then they'll be dumpster divin' with the rest of the "retirees" and tryin to grovel to Wal Mart

LetThemEatRand's picture

And voting for the husband of a banker (Cruz) or the wife of a sociopath (cankles).

Lord Drek's picture

Retirement? What a silly concept. What a silly country we live in.

Genesis 3:19 In the sweat of thy face shalt thou eat bread, till thou return unto the ground; for out of it wast thou taken: for dust thou art, and unto dust shalt thou return.

zorba THE GREEK's picture

Drek... I just looked under my bed and found someone either coming or going.

Decolat's picture

+1. Saving for retirement is fear of death. And more importantly, fear of life, if you think about it.

rbg81's picture

So, we should all just live for today and work till we drop?

When you consistently save for retirement, you actually accumulate more $$.  And that $$ translates into freedom and flexibility.  That's much better than being a perpetual debt slave working paycheck to paycheck, no?

IPA's picture

Agreed, you have three choices. Spend more than you make with credit card and such (not sustainable) spend exactly what you make (pay check to paycheck) or spend less than you make (savings).

toady's picture

That mindset is one of my major problems with religion. No one is supposed to plan. You're just supposed to wander the earth, trusting in God, not knowing where you will sleep tonight or eat tomorrow. Have faith!

Svener's picture

No it's love of life.  so much so that in those years when you have the least energy you can afford to take a nap in the afternoon instead of going to that meeting.  21 months to go and counting.  Out by 55!

zorba THE GREEK's picture

Freeze dried food, silver and ammo- the new retirement program.

jez's picture

And saying "Welcome to WalMart" 500 times a day.

FreeNewEnergy's picture

Rake+hoe+shovel+non-GMO seeds+land=Health Care

ebworthen's picture

You can't save for retirement when costs are too high, pay is too low, and you are being bled to death by a parasitic Wall Street and Washington.

Yes, it is that simple.

JuliaS's picture

It's time for North Americans to discover the East European retirement plan. It's called "suicide". Everyone's approved, no applicant refused, no need for medical, no monthly fees.

Kirk2NCC1701's picture

Don't be stupid or a sheep.

Multi-generational living (3 or 4 gen multiplex) is one shrewd solution that saves a bundle, and leads to good family ties and well-grounded people.

The next logical and organizational step is a strong and resilient community. Think global, act local.

Stop being afraid, start somewhere but start.

And stop following that loser Hippie God (who's into raising meek, shearable, shagable and fleeceable sheep), and create or follow a Warrior God.

Poor Grogman's picture

36And He said to them, "But now, whoever has a money belt is to take it along, likewise also a bag, and whoever has no sword is to sell his coat and buy one.

zorba THE GREEK's picture

Or just use the old testaments God. He didn't take no crap. Eye for an eye and all that.

Vendetta's picture

Don't worry, you'll get your wish when the next global financial event occurs.

Anusocracy's picture

All of the things you mentioned are a consequence of government.

Luckily for the Lords and Masters, the dupes still are clamoring for them.

headhunt's picture

'All of the things you mentioned are a consequence of government.' - that is 'government unions'.

The government unions are an incestuous amalgamation of power and greed.


Svener's picture

BS.  Yes you can.  Don't buy a smart phone, don't buy beer, don't go out to eat 12 times a week, don't hire lawn service., don't get your nails done, don't buy dish/cable TV (you have a library, use it), have your wife cut your hair, don't buy new cars (buy used), don't get the latest tablet. I could go on and on.  We've done it and there are disabled (yeah right) and welfare folks that have more and better gadgets and can afford to eat out more often than we do.  Absolutely everyone I know that grumbles about how broke they are just spend foolishly.  "I'm so broke this week I had to get a pay day loan" as he puffs on a cig!

reader2010's picture

Saving for one's own retirement is a very recent concept,  and it's an essential part of the ruling ideology. 

q99x2's picture

This is not good in the long term for anyone.

nasa's picture

Serfs can retire?  

AdvancingTime's picture

Your post hammers away at the real truth. Too many articles try to sugarcoat how ill prepared most Americans will be when they retire. Unfortunately many people will quickly become dependent on the government. An American born in 1945 can expect nearly $2.2m in lifetime net transfers from the "state" far more than they pay in, and far more than any previous group.

A study by the International Monetary Fund in 2011 compared the tax bills of what different age citizens pay over their lifetime with the value of the benefits that they are forecast to receive. The boomers are leaving a huge bill and will be a burden to the young. More on the size of this mess in the article below.


JR's picture

Most baby boomers have yet to retire; the oldest this year is 68 years of age, the youngest 50. Fox News reported in August of 2012 that the majority of these new retirees, except low-income workers retiring, will be receiving less in Social Security than they paid in.   Reports Fox:

“People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press… 

“A married couple retiring last year, after both spouses earned average lifetime wages, paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank. 

“Social Security benefits are progressive, so most low-income workers retiring today still will get slightly more in benefits than they paid in taxes. Most high-income workers started getting less in benefits than they paid in taxes in the 1990s, according to data from the Social Security Administration. 


P.S. And this, I assume, doesn't take into account inflation. As Jim Quinn writes today on ZH:

"The insidious central banker created monetary inflation is the cause of all the ills in our warped, deformed, rigged, financialized economic system."

AGuy's picture

"“A married couple retiring last year, after both spouses earned average lifetime wages, paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank. "

How much with Medicare and other Gov't run medical subsidies? My guess is that if the medical subsidies are included thet will very much get more out than they paid in.


In the end it doesn't matter, the US is insolvent and can't avoid a collapse or WW3. Its just a matter of time before this house of card collapses.


toady's picture

"How much with Medicare and other Gov't run medical subsidies? My guess is that if the medical subsidies are included thet will very much get more out than they paid in."

Probably as much as they paid to Medicare and other gov taxes.

More importantly, the people aren't being paid Medicare or medical subsidies, the medical-big pharma complex is. The people who realize they will die do everything they can to not let the insurance companies drain their bank account or fleece the government.

But in the end, most people give up all their life savings and allow insurance companies to grift every nickle possible for just a few more minutes.

JR's picture

“Obamacare will therefore put Medicaid increasingly at the heart of our health-care system." -- John Hood

In short America has a welfare problem. And welfare for Medicaid is growing exponentially, massively costing taxpayers, both on the state and federal levels, and much of that welfare cost is hidden under Medicare when many Medicaid recipients were transferred into Medicare -- a deliberate ruse to make it seem most of Medicare was going to hard-working Americans.

The Center on Budget and Policy Priorities wrote on May 8, 2013 that “in 2012, Medicaid provided health coverage for 67 million low-income Americans over the course of the year, including 32 million children, 19 million adults (mostly low-income working parents), 6 million seniors, and 11 million persons with disabilities, according to Congressional Budget Office estimates.

The Heritage Foundation reports that “Obamacare will add $1.8 trillion to federal health care spending by 2023. By 2015, health care spending will overtake Social Security as the largest budget item, including Obamacare’s coverage expansion provisions: a massive expansion of Medicaid and subsidies for the new health insurance exchanges.”

John Hood, president of the John Locke Foundation, a state-policy think tank based in North Carolina, and the author of, among other books, Investor Politics, wrote in 2010 on National Affairs:

“Medicaid already covers 60 million Americans and accounts for 16 cents of every dollar spent on medical services in the United States (I understand it now accounts for one quarter of every dollar spent). …

“Under Obamacare…as a result of loosened eligibility requirements, the bill's proponents expect some 16 million more Americans to sign up for Medicaid between 2014 (when the new rules go into effect) and 2019. This enormous increase in the Medicaid rolls represents about half of Obamacare's projected reduction in the number of uninsured Americans."



JR's picture

Retirees on Medicare continue making insurance payments after they retire and the payments continue to get higher as they get older, even if they never use their Medicare.

The truth is that Medicare itself has become a wealth redistribution program, taking from higher income retiree beneficiaries to give to lower income beneficiaries – many of the latter former Medicaid beneficiaries who paid nothing into Medicare during their working years but who were added later to the Medicare program by government politicians.

A health insurance payment after retirement of $700-$800 a month or more, i.e., $8400-$9600 a year, is not unusal for a mid-to-upper middle class couple on Medicare. This includes Medicare Part B premiums plus premiums for Supplemental Health Insurance to private companies such as Blue Cross. And as retirement incomes increase to designated levels, Medicare payments after retirement increase accordingly.

As Medicare.gov reports regarding Part B Medicare costs:

“You pay a premium each month for Medicare Part B (Medical Insurance). Most people will pay the standard premium amount. However, if your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.”


Retirement.com reports somewhat lower figures "on average." It reports that individual Medicare beneficiaries aged 65-74 spend $2,920 (c. $6000 for a couple) a year in out-of-pocket expenses. Those aged 75-84 spend $3,815 (c. $8000 for a couple), a year. And, those 85 and above spend $4,615 a year (c. $9200 a couple)– an average of 30 percent of their income.

Almost half of these out of pocket health care expenses were for premiums for Medicare part B or private medical plans. Approximately another 24 percent of that spending - $830 a year - is for prescription drugs.

Perhaps worst of all – none of these health insurance options offer long term care health insurance. Most also don't cover vision, dental care, hearing aids or prescription drugs.


cmb's picture

I read ZH for good news, but I really hate the about of dumb comments that insinuate that SS is an entitlement.  My parents have PAID into SS and many of you here have paid INTO it, yet you cheer for SS to be cut? check you fucking inteligence levels please.

Considering that the Treasury uses the SS fund brought in at "their discretion", if their isnt enough money...they need to find the money from somewhere like they find money for the wars in the middle east that make the corporations get rich, maybe the corporations should cover SS for a year.  hell I dont know the answer, but I know that SS is not insolvent...its only insolvent because the fed has stolen money out of it.


how anybody here can consider SS a entitlement program must have never come out of the backwoods for the last 40 years. 

headhunt's picture

The Social Security shortfall is solely due to the the huge bill being heaped upon the average citizen by the government unions. Their legacy costs are already in the trillions and growing. All the while they scream for more; larger pensions, earlier retirements, better healthcare - all paid for by you. Money out of your paycheck to support their lazy asses in their early retirement.

The SS costs are a pittance compared to this theft out of your every paycheck.

Get to work bitchez.

messymerry's picture

Couldn't agree more!!!  Public employee unions are an abomination of the highest order.  UTTERLY UNJUSTIFIED!  They are a slap in the face.  They and their supporters should be summarily dismissed.  The primary reason I ditched my local Tea Party is the disproportionate percentage of sanctimonious federal and state retirees sucking their asses off the system.  They are revolting in their parochial rationalizations.  If God is kind, they will shortly be relieved of their ill gotten gains...  They say an offense against a servant of the king is an offense against the king himself.  I say, a fate that's good enough for the king is a fate that's good enough for his minions.  Toss them all in disgrace.

OBTW:  I'm opening a distributorship in tar and feathers if you'd like to invest...  ;-D