Americans preparing for their autumn years got a shock during the second week of October when the Trump administration publicized the idea to restrict tax deferred contributions which workers provide to respective 401(k) accounts. Although the White House said negative to such a thing happening, an important GOP tax slasher said that the adjustment to 401(k) continue to be under consideration.
Such a debate invariably involves asking the question of how much Americans are actually prepared fore the retirement phase in their life. A majority of Americans need a combo of Social Security and savings to subsist. They must also make sure that the money will be stretched over a number of years, even over several decades. A few can save better than their friends for retirement. It is a surety that a person aged over 65 years will pay more money for access to healthcare.
As Americans wait for news on what will happen to the 401(k) contributions, a few facts must be considered when it comes to judging the retirement readiness of Americans. The important fact is that, as per the Federal Reserve, about 50 percent of Americans enjoy a retirement account, like an Individual Retirement Account or the 401(k). Not every person can save money through a 401(k). This happens even if the concerned person wants to save money. This is as all jobs do not offer it in the first place. A study by US Government Accountability Office found out that 35 percent of the low income households where members are gainfully employed get access to 401(k). Contrarily, about 80 percent of the high income households enjoy access to 401(k).
Tougher to save
A standard family with retirement account enjoyed $60,000 in 2016. A big variation exists in such a case. Typical savings in top 10 percent of households came to $403,000. For middle income households, the savings came to $25,000. Millenials have greater amounts of money compared to their parents when the latter was at their age. For a person below 35 years old, the retirement account had about $12,300 in 2016. Compared to 1989, the same variety of households had $7,500 post accounting for due inflation.
For full Social Security retirement benefits, the age to obtain it is getting higher. A person at 66 years of age can hope to enjoy full benefits. However, the full retirement age will go up gradually. It will start with individuals born in 1955. It will then hit people who were born in 1960.