Bankrate Survey: 36 percent not saving for retirement

An article from Bankrate has been doing the rounds on the internet, picked up by numerous financial sites: Survey: 36 percent not saving for retirement

An alarming number of Americans aren't preparing for the day when they'll need to live off their savings.

More than a third of adults say they have not started saving for retirement yet, according to a national poll accompanying Bankrate's monthly Financial Security Index.

Even Americans who are getting close to retirement age seem to be struggling when it comes to planning their financial future. The survey shows that more than a quarter of the respondents age 50 to 64 have yet to start saving for retirement.

Despite the lack of attribution in the article, we agree. However, the numbers are to be expected. There are many Americans who live paycheck to paycheck and simply can't afford to save any money, particularly those who earn in the lower third of the income scale. For them, trying to save means not eating, not paying rent or a car payment. One of the founding ideas of Social Security back in the 1930's was to provide a safety net for the working people who could not otherwise afford to save. Over time, Social Security has transformed from a benefit that might pay all a retiree's reasonable expenses to a supplement to savings. The disappearance of defined pensions over the last two decades has made saving even more challenging since it has taken away another method of automatic savings.

While we don't offer an easy solution to this problem, we can't stress enough that if you are in that group of 36 percent, either by income or age, work as hard as you can to get yourself out of that group. Do your best to begin putting money aside for retirement each month. If you have children, setup an IRA for them and deposit a small amount each month until they can do it themselves. They'll thank you for it later in life!

In order to retire with some level of financial security, you'll need to build up savings of at least $15-$20 for every dollar you plan to spend above and beyond your annual social security or pension income.  If you take out more than 4% of your savings per year, you risk running out of money towards the end of your life.