Today, you will find more people having multiple jobs or side hustles than ever before. In America, many young professionals have a steady job while still maintaining a side gig in their off hours or on the weekend. That means that there are a lot of hardworking people out there today. But, are they also being smart with their money?
That question can mean a lot of, but in particular, we are talking about retirement. The latest data from the Federal Reserve shows that more Americans today aren’t saving for retirement. Those who are saving are also in trouble of not knowing what they are doing.
According to a report on the Economic Well-Being of U.S. Households, many Americans are having trouble with financial literacy. In fact, six out of 10 Americans who have a 401(k) or an individual retirement account are not comfortable with managing the investment. The report was made in 2018, surveying 11,000 Americans.
The responses in the report are self-assessments, however. That means the respondent may actually be doing better than they assume. Yet, industry experts say that people should do more non-biased research about retirement. The more they see the big picture of their future, the better they will be able to handle retirement.
Unsurprisingly the data shows that among non-retirees, more people identified as white feel secured that their retirement saving is on track(42%of the participants). Meanwhile, black participants have the least security about this (23%of the participants). They are also the biggest demographic who believe they have no retirement savings (39%of the participants) followed closely by Hispanic participants (36%of the participants).
In terms of age there the older participants look like they believe they are doing well with their retirement savings(45%of the participants), but there is still a significant number of them with no retirement savings(13%of the participants). Many in the 18-29 age group said they do not have retirement savings (42%of the participants), but a lot of them also said they believe their retirement is on track (26% of the participants).
Further data shows that more than half of those surveyed say that their retirement is in a defined-contribution plan like a 401(k), a third of them disclosed that they use an IRA instead. A fourth of the group said that they have a pension. In contrast, 42% of the participants say that they are putting the savings in a nonretirement account. Among other options, 14% said they use real estate for their saving; another 7% said they use business.
Although many believe that their retirement saving is “on track.” There is still a discrepancy when it comes to the meaning of the phrase. For those in the 18-29 group, it’s having $10,000. Then the 30-44 said it is having $100,000. Finally, the 45 to 59 believe it is having about $250,000. Despite what any group believes an exact number for a retirement fund depends on a number of factors. The big problem Americans are facing right now is the fact that not all of them are financially literate. That is the big issue to address first, retirement planning will follow after.