Report: Most Americans Not Putting Enough Away For Retirement

The stock market surge has given a lift to many retirement portfolios. But a new report finds that most Americans haven't saved nearly enough for the kind of retirement they expect.

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RENEE MONTAGNE, HOST:

With the stock market up sharply, and home prices rising over the past couple of years, more Americans are feeling better about their retirement savings. But as NPR's Chris Arnold tells us, a report out this morning finds most Americans still aren't saving as much as they should.

CHRIS ARNOLD, BYLINE: Only 18 percent of Americans say they are very confident about having enough money to retire comfortably. But a little more than half of people say they're at least somewhat confident about it. Nevin Adams is a director at the Employee Benefit Research Institute, which does this annual report. He says in recent years the recession and the sluggish recovery beat up people's confidence - that's both for workers and actual retirees.

NEVIN ADAMS: It has been trundling along at record low levels the last five years so it's has bumped up from that. So that's a good sign. Retirees are feeling even more positively about their actual experience in retirement, so again that bodes well also.

ARNOLD: Still, almost all of the bounce in confidence for workers comes from people with household incomes of more than $75,000. Below that, confidence stayed flat and near record lows. Part of that's because the stock market rebound doesn't cheer you up if you don't own much or any stock. And people with higher incomes are of course more likely to own stock and more likely to save. So what about people who make less money? Some economists say there is something that could make a difference.

BRIGITTE MADRIAN: For me the really interesting finding in the report was the dramatic difference between those who are working at companies that have an employer savings plan and those who are not.

ARNOLD: Brigitte Madrian is an economist at Harvard who focuses on retirement policy and human behavior. And she thinks there's actually some exciting progress here. First, she says, there's one thing that makes people much more likely to save for retirement.

MADRIAN: Having your employer take money out of your paycheck and save for you. The U.S. government figured this out in the 1950s when it came to income tax collection, that the way to get people to pay their taxes was to do it through payroll deduction.

ARNOLD: The same is true for getting people to save for retirement. And Madrian says in just the past few years, a lot more companies are starting to do that automatically for people. So employees, they don't even have to sign up for anything. The default is they get money put into a retirement account.

MADRIAN: So it takes a task that they want to do but that's hard and makes it easy.

ARNOLD: Still, Madrian says for about half of all workers in the U.S., their employer still has no retirement plan or the worker is not taking part in it. So that's still a big problem. Nevin Adams.

ADAMS: If you've got a workplace retirement plan, you should take advantage of it. Particularly if there is an employer match, because to you, anyway, that's literally free money.

ARNOLD: As far as why many people don't take that free money or aren't good at saving on their own, Brigitte Madrian's been studying that for years.

MADRIAN: For many of them it's a daunting task. They're afraid of making mistakes. They don't have a lot of training in financial decision making and they're paralyzed, and as a result they don't end up signing up for their savings plan. They make lots of mistakes.

ARNOLD: Just getting started is often the biggest hurdle. One troubling statistic from this latest report: half of all workers have saved less than $10,000 for retirement. And more than a third of American workers have saved less than $1,000 dollars. Chris Arnold, NPR News.

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