Americans say they’re focused on saving for retirement, but a look at how much they actually have in their retirement accounts shows just how far they are from their goals.
The average Baby Boomer has a goal of accumulating enough of a nest egg to have $45,500 a year in retirement income, according to a new report from BlackRock. The average retirement portfolio, however, has just $136,200 in it, which would provide an average estimated income of $9,129. That would leave the average Boomer nearly $37,000 per year short of his goal.
“It’s clear the proverbial ‘nest egg’ is broken and misleads investors into guessing how much they want in retirement and whether they really have enough savings to reach their goals,” Rob Kapito, BlackRock president, said in a statement.
Part of the problem is that Boomers are far too conservative with their investments. The average American retirement portfolio is 65 percent in cash, which can’t provide the growth needed to achieve investment goals. Nearly four in 10 investors say they want cash saved as a security blanket before they can think about investing.
Another hurdle faced by savers is the lack of a disciplined plan to save for retirement. Less than a quarter of Americans regularly set aside money for long-term savings, and just 14 percent have a formal financial plan. Only 21 percent of Americans make regular contributions to retirement accounts through work, and the same amount save for retirement outside of their employer plan.