Despite Projected Shortfalls, Americans Fail To Ramp Up Retirement Savings

A recent survey from Charles Schwab reveals that the recession has not prompted many people to change their behavior and start saving more for retirement. Perhaps the stereotypical images of happy, carefree retirees found in marketing brochures and ad campaigns have convinced Americans that all is well!

The Schwab quarterly survey found that many Americans are neither financially nor emotionally ready for retirement. Nearly 40% are not currently saving for retirement and, despite market losses, 62% have not adjusted their thinking about the age at which they will retire.

Survey respondents estimate they will need just over $1.2 million to comfortably retire, yet those currently saving for retirement have put away an average of $194,000. As testimony to the power of positive thinking, 41% of those surveyed feel confident about their retirement preparedness.

A deeper look at those closest to retirement (ages 55-63) shows that 51% surveyed have saved less than $500,000, though they most commonly believe they will need $2 million to retire comfortably. To help bridge the $1.5 million gap, 52% of this group are thinking they will retire later than planned, while 47% report they have not changed their thinking about retirement.

Clearly, we all have more work to do to educate investors about what it will take to secure a comfortable retirement. Some straight talk about the need for more financial discipline (and more realistic imagery) would be good first steps.