Middle Class Americans are on the Edge of a Retirement Cliff

Nearly all Americans are pessimistic about their retirement years — and with good reason. A recent survey of 1,000 people conducted by Harris Interactive for Wells Fargo quantified the bad news, revealing that middle class Americans are on the edge of a retirement cliff.

Middle Class Americans are on the Edge of a Retirement Cliff

According to the survey:

  • 53% are not confident they will have enough money saved for the retirement lifestyle they want.
  • 30% expect they will have to work until at least 80 to have a comfortable retirement lifestyle.
  • 73% believe their employers do not want them to work in their 80s.
  • 70% of middle class Americans expect to work during retirement.
  • 39% believe they will have to work out of financial necessity.

By any objective standard, it’s clear the American Dream, whatever you believe that to be, has been replaced by the Retirement Nightmare.

Joe Ready, director of Wells Fargo Institutional Retirement and Trust observed:

It is so tough for Americans to save for retirement, and we feel it is very important to keep shining the light on this issue. People say they’ll work longer, but how possible will this be for millions of Americans? Preparing for retirement can’t be kicked down the road because the other picture that is emerging is how many people will live very close to the poverty line in retirement. We’ve got to marshal our resources as a country, an industry and as individuals to deal with the issues creating this cliff.

An ironic statement, given that financial institutions like Wells Fargo are, in a large part, responsible for the devastating economic crisis that faces us and are perpetuating the situation by promoting retirement plans and investments that siphon money out of the middle class and into those institutions’ bottom line profits.

Middle class Americans say they will need a median of $300,000 to support them in retirement, but to date, have only saved $25,000 (median). When asked what percentage of their nest egg they expect to withdraw annually in retirement, the median withdrawal predicted by middle class Americans is 10%. Many experts say withdrawals should be maintained at three to four percent.

That’s a huge gap to cover, especially if you’re already in your 50s — or even worse, 60s. Savings accounts and CDs return almost nothing and result — at best — in a slower, safer loss of your money. 401(k) plans are proving to be disastrous for many reasons. Middle class Americans are on the edge of a retirement cliff. Now what are we going to do about it?

Click here to read the Wells Fargo press release presenting their findings

 

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