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Wells Fargo Survey Finds Saving for Retirement Not Happening for a Third of Middle Class

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Saving for retirement is a formidable challenge for middle-class Americans, with 34% not currently contributing anything to a 401(k), an IRA or other retirement savings vehicle, according to the fifth annual Wells Fargo Middle-Class Retirement study. Forty-one percent of middle-class Americans between the ages of 50 and 59 are not currently saving for retirement. Nearly a third (31%) of all respondents say they will not have enough money to “survive” on in retirement, and this increases to nearly half (48%) of middle-class Americans in their 50s. Nineteen percent of all respondents have no retirement savings. On behalf of Wells Fargo, Harris Poll conducted 1,001 telephone interviews from July 20 to August 25, 2014 of middle-class Americans between the ages of 25 and 75 with a median household income of $63,000.

Sixty-eight percent of all respondents affirm that saving for retirement is “harder than I anticipated.” Perhaps the difficulty has caused more than half (55%) to say they plan to save “later” for retirement in order to “make up for not saving enough now.” For those between the ages of 30 and 49, 59% say they plan to save later to make up retirement savings, and 27% are not currently contributing savings to a retirement plan or account.

Sixty-one percent of all middle-class Americans, across all income levels included in the survey, admit they are not sacrificing “a lot” to save for retirement, whereas 38% say that they are sacrificing to save money for retirement.

Saving for retirement isn’t easy. It requires sacrifice, and it’s not something people can push off and hope to achieve later in life. If people in their 20s, 30s or 40s aren’t saving today, they are losing the benefit of time compounding the value of their money. That growth can’t be made up later, so people have to commit early in life to make savings a regular discipline year after year – it is the only way most people will achieve their financial goals to carry them through retirement,” said Joe Ready, director of Institutional Retirement and Trust.

While a majority of middle-class Americans say that they are not sacrificing a lot to save for retirement, 72% of all middle-class Americans say they should have started saving earlier for retirement, up from 65% in 2013. When respondents were asked if they would cut spending “tomorrow” in certain areas in order to save for retirement, half said they would: 56% say they would give up treating themselves to indulgences like spa treatments, jewelry, or impulse purchases; 55% say they’d cut eating out at restaurants “as often”; and 51% say they would give up a major purchase like a car, a computer or a home renovation. Notably, fewer people (38%) report that they would forgo a vacation to save for retirement.

What Have They Saved?

According to the survey, middle-class Americans have saved a median of $20,000, which is down from $25,000 in 2013. Middle-class Americans across all age groups in the study expect to need a median savings of $250,000 for retirement, but they are currently saving only a median amount of $125 each month. Excluding younger middle-class Americans who may be earning less money, respondents between the ages of 30 and 49 are putting away a median amount of $200 each month for retirement, whereas those between the ages of 50 and 59 are putting away a median of $78 each month for retirement.

Twenty-eight percent of all age groups included in the survey report that they have a written financial plan for retirement. That number is slightly higher, 34%, for those between the ages of 30 and 39. People with a written plan for retirement are saving a median of $250 per month, far greater than the median $100 per month that is being saved by those without a written plan.

“People who have a written plan for retirement are helping themselves create a future on their own terms, with a foundation built on saving, and hopefully, investing. As evidenced by the difference in monthly savings amounts for those with a written plan and those without, it is clear that a plan makes a sizeable difference,” added Ready.

The Power of the 401(k)

Middle-class Americans value the 401(k) as a way to create a retirement nest egg. Seventy percent of respondents have a 401(k) or equivalent plan available to them through their employer, and a majority of them (93%) are currently contributing to their plans. Approximately 67% of those in a plan contribute enough to maximize their company’s 401(k) match, and the median contribution rate for those between the ages of 30 and 59 is 7%.

Eighty-five percent of those with access to a 401(k) or equivalent plan from their employer affirm they “wouldn’t have saved as much for retirement” if they did not have a 401(k). Moreover, 90% say the 401(k) or equivalent plan “makes it easy to save for retirement.”

“The 401(k) makes a significant difference for people in that it gives them the ability to save in a regular, systematic way. It conditions people to think that saving money is paying themselves first and is just as important as paying day-to-day bills,” said Ready.

Examining retirement savings by age, the median amount saved by those in their 40s is $40,000, for those in their 50s is $20,000, and those in the age range of 60 to 75 is $25,000. The median amount saved by those who have access to a 401(k) plan is much higher than that saved by those without access to a plan, particularly for those who are younger. Middle-class Americans between the ages of 25 and 29 with access to a 401(k) plan have saved a median of $10,000 versus a median of zero savings for those without access. Respondents between the ages of 30 and 39 with access to a 401(k) have saved a median of $35,000 versus those without access who have saved a median of less than $1,000, and those between the ages of 40 and 49 with access to a 401(k) have saved a median of $50,000 versus the $10,000 saved by those without access.

Having access to a 401(k) also seems to positively impact a sense for what is possible. More than half (58%) of non-retirees without access to a 401(k) plan say “it is not possible” to pay bills and “still” save for retirement, compared to a third (32%) of those who have access to a plan, but say they can’t save and pay bills at the same time.

Those who have access to a 401(k) are more likely to say they would give up certain expenses, big purchases or expenditures like eating out in order to save for retirement, at a rate approximately 10 percentage points higher than those without access to a 401(k).

The Retirement Picture

Across all age groups, almost half (48%) of non-retirees are not confident that they will have saved enough “to live the lifestyle they want” in retirement. This lack of confidence jumps to 71% for non-retirees between the age of 50 and 59.

A quarter of all middle-class Americans say they “get depressed” when thinking about their financial life in retirement. However, the rate of those who feel down about retirement increases to one in three for those in their 40s and 50s. In a new survey question, 22% of the middle class say they would rather “die early” than not have enough money to live comfortably in retirement.

Working longer or into traditional retirement years appears to be a predicted reality for a third of middle-class Americans who say they will need to work until they are “at least 80 years old” because they will not have enough retirement savings, holding steady from a year ago. Half of those in their 50s say they will need to work until age 80. In another new question asked this year, a quarter (26%) of middle-class Americans say working into their 80s is something they plan to do even if it’s not a financial necessity.

The majority (70%) of middle-class Americans do not think Social Security will be their primary funding source for retirement, but the perception varies greatly for those based on age. Almost half (46%) of non-retirees in their 50s think Social Security will be their primary source of income, as do 56% of non-retirees between the ages of 60-75.

EDITORS AND REPORTERS: Retirement Savings Tips

  • Get started saving today

If you have the option to join your employer’s 401(k) plan, enroll today and defer savings at a pre-tax rate up to $17,500 per year; participants age 50 and older can make up to $5,500 in additional catch-up contributions each year. Pay yourself first and defer as much of your salary as you can on a pre-tax basis. If you do not have access to a workplace retirement plan, you can set up an automatic savings program and make systematic contributions of up to $5,500 if you are under age 50, or $6,500 if you are age 50 or older through regular contributions to a Roth IRA (with after-tax dollars) or a traditional IRA (with pre-tax dollars) if you meet eligibility requirements.

  • Get the company match – if it’s offered

If you are contributing to a 401(k), find out if there’s a company match. If there is, make sure you’re taking full advantage of it. Remember that the money your employer contributes on your behalf can be added to the amount you’re contributing, and combining the two contributions helps give your overall savings goal a boost.

  • Increase your rate of savings

Research shows that the #1 factor in saving for retirement is your contribution rate, and regular contribution rate increases. Find out if your employer’s plan offers the option to increase your contribution amount automatically and on a regular basis. That’s one less thing to remember and it’s an easy way to help you gradually save more in preparation for retirement. You can always change the increase rate or limit for your automatic retirement plan contributions.

  • Find out what type of investor you are

Your asset allocation is the “big picture” – the way you divide your investments among the three basic investment categories: stocks, bonds, and stable value investments. Knowing your investor type – conservative, moderate, or aggressive – can provide a good starting point for determining which asset allocation makes the most sense for you. Use an online tool like to help you determine your risk tolerance.

  • Leave your savings alone

It may be tempting to spend your savings if you change jobs or have an unexpected expense pop up, but it is important to keep these assets growing in a tax-favored retirement account. Withdrawing money from your employer-sponsored plan can erode your retirement savings to the point where you may jeopardize your financial security in retirement. Keep your money working for you!

Read a blog post by Joe Ready: Saving with a 401k: 4 tips for success

This information is for educational purposes only and does not constitute investment, financial, tax, or legal advice. Please contact an investment, financial, tax, or legal advisor regarding your specific situation.

About the Survey

On behalf of Wells Fargo, Harris Poll conducted 1,001 telephone (901 landlines and 100 cell phones) interviews of middle-class Americans in their 20s (ages 25-29 only), 30s, 40s, 50s, 60s and 70-75, surveying attitudes and behaviors around planning, saving and investing for retirement. The survey was conducted from July 20 to August 25, 2014. To target the middle class, the survey included only respondents who fell within specified income and wealth brackets. Those aged 25 to 29 had 2013 household income of $25,000 to $99,999 and household investable assets of $99,999 or less. Those aged 30 to 75 had 2013 household income of $50,000 to $99,999 or household investable assets of $25,000 to $99,999. The lower limits for 20-somethings were used to reflect the early stage of their careers. For the 20s age group, only respondents aged 25 to 29 were included in order to focus on workers.

Data were weighted as needed to represent the population of those meeting the qualification criteria. Figures for education, age, gender, race, ethnicity, region, household income, investable assets, number of adults in the household, and number of phone lines (to adjust for probability of selection) were weighted where necessary to bring them in line with their actual proportions in the population.

About Wells Fargo & Company (Twitter @WellsFargo)

Wells Fargo & Company (NYSE:WFC) is a nationwide, diversified, community-based financial services company with $1.6 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, 12,500 ATMs, and the internet (, and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at Wells Fargo Blogs and Wells Fargo Stories.

About The Harris Poll

Over the last 5 decades, Harris Polls have become media staples. With comprehensive experience and precise technique in public opinion polling, along with a proven track record of uncovering consumers’ motivations and behaviors, The Harris Poll has gained strong brand recognition around the world. The Harris Poll offers a diverse portfolio of proprietary client solutions to transform relevant insights into actionable foresight for a wide range of industries including health care, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer packaged goods. Contact us for more information.

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