According to a recent study by financial services firm Edward Jones, almost half (45 percent) of non-retired Americans are not currently saving for retirement. Of those who are not yet saving, only 36 percent plan to do so in the future and almost 10 percent say they never plan on saving for retirement.

The study, which interviewed more than 1,000 non-retired and retired Americans, also found significant discrepancies by age among those who have not yet started saving. Although they plan to do so in the future, the majority (58 percent) of the study’s youngest non-retired respondents (18 to 34 years) have not yet started saving.

The study found a particularly interesting disconnect between the expectations Americans have on their retirement savings strategies and reality. For instance, of respondents ages 18 to 34, 90 percent say they have or plan to start saving for retirement before they turn or turned 30. Just 7 percent of that group plan to start saving for retirement in their 40s.  The next age group – 35- to 44-year-olds – found a significant increase in those that did or planned to start saving for retirement in their 40s, with more than one-quarter (26 percent) saying so.

“When it comes to retirement savings, there’s a big difference between planning to save and actually doing so,” said Scott Thoma, Principal and Investment Strategist for Edward Jones. “While intentions to save for retirement are legitimate, individuals tend to satisfy more immediate, short-term spending goals and push off their long-term saving goals. This behavior can be incredibly detrimental for individual investors, particularly as they enter the critical savings periods of their 30s and 40s when they have (and unfortunately waste) a tremendously valuable asset – time.”

Critical Decades for Retirement Savings

Almost all (90 percent) of the study’s youngest respondents indicated that they either plan to or began saving in their 30s or earlier. However, when looking at respondents ages 35 to 44, only 64 percent actually began saving in their 30s or earlier.

Just 22 percent of overall respondents indicated that they plan to or actually began saving between the ages of 40 and 50. However, when examining the plans versus reality amongst respondents ages 35 to 44 and 45 to 54, this percentage jumped to 3 and 30 percent, respectively indicating that intentions tend to fall short.

The Influence of Household Size and Children

Household size and number of children also influenced respondents’ retirement savings plans. Case in point, only 39 percent of respondents in single person households indicated that they are not currently saving, compared to 51 percent of respondents with a household size of three or more. Similarly, 58 percent of respondents with no children have already started saving, while 49 percent with any children indicated the same.

“Parents are recognizing the need to save earlier in order to account for additional costs, like education,” added Thoma. “At Edward Jones, we help clients navigate the balance between their own retirement savings goals, and those for their families. We cannot emphasize enough the importance of saving for retirement early and often – it leads to higher future income in retirement, with less stress and uncertainty while working to achieve those goals.”

Source: Edward Jones