How is that possible? Because it’s all relative. The Employee Benefit Research Institute’s most recent annual survey of U.S. workers and their retirement savings reveals that the percentage of workers having fewer than $10,000 in savings stands at 43%. That’s up from 39% in 2009.
Even more ominous, the percentage of workers who reported they have less than $1,000 in savings is 27% — significantly more than the 20% reported in 2009.
The EBRI’s definition of retirement savings excludes the value of primary homes and defined-benefit pension plans. Still, these are startling figures, showing that large numbers of Americans have little if anything in the way of a savings safety net.
It’s true that some people have plowed their savings into the purchase of a home. But these “house poor” individuals are often among the first who face mortgage foreclosures upon the loss of a job, because they have so few cash resources upon which to fall back.
If there is a glimmer of good news in these dreary statistics, it’s that more people are awakening to the reality of their finances. Gone is the notion that Social Security will pay enough for a decent retirement lifestyle. Indeed, less than 20% of respondents expressed confidence in their ability to save enough for a comfortable retirement. That’s the second lowest reading ever recorded in the 20-year history of the EBRI’s annual survey.
Only ~45% of workers with some form of savings have more than $25,000 stashed away … and people know that $25,000 is not nearly enough for retirement, Social Security payments being what they are. Consequently, in the 2010 EBRI survey, one in four workers report that they’ve decided to postpone their retirements (that’s up from ~15% saying so in the 2009 EBRI research).
For its survey, the Employee Benefit Research Institute queried ~1,150 U.S. workers (age 25 and older) plus retirees, making it one of the most comprehensive field studies on the topic of U.S. retirement savings. There’s a wealth of additional statistics and insights available here.
Nones Notes 
This should certainly come as no surprise. And I think there is more than one reason it should give us all pause.
One of the “bubbles” few people are talking about is the demographic bubble—the huge number of Boomers who are nearing or at retirement age. Boomers have not only defined our contemporary culture, they’ve served as the engine for one of the longest and most robust economic booms the planet has ever seen.
For three decades, they worked and borrowed to spend, spend, spend. That spending (along with innovations that brought dramatic improvements in productivity) turbocharged every sector of the economy.
My concern is that an entire generation of disproportionate size and wealth now has been completely traumatized. They’ve seen their house prices plunge, their stock portfolios ravaged, and their savings depleted. It’s widely known and completely understandable that the older people get, the more they are inclined to save. So what happens when living on a tight budget suddenly becomes an ongoing imperative for a massive tranche of the population?
Young people will soon put this economic collapse behind them and get on with consuming. Their memories can be short. But I’m not sure the Boomers will ever forget what they have experienced these last couple of years. And I fear that could spell economic trouble for a long time to come.