Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

40% of Americans say they can't afford retirement

By Jessica Dickler, staff writer


NEW YORK (CNNMoney) -- Gone are the plans to golf, garden or read on a creaky porch swing.

Almost 40% of working Americans said they will never afford retirement, according to a report released Wednesday by the American Institute of Certified Public Accountants.

Retirement ranked as the most important issue out of all financial concerns facing Americans, including uninsured medical expenses and rising education costs. In fact, it topped the list for the second year in a row, the survey said.

The majority, or 56%, of those polled said they were not saving for retirement, mostly because of the toll higher gas and food prices were taking on their budgets.

Fifty-five percent said they didn't even know how much they need to save for retirement, while those that thought they did know often underestimated the amount, the AICPA said.

When asked to estimate how much savings they needed to retire at age 65 and live for 20 years, most of those earning $50,000 to $75,000 a year said they needed $250,000 in savings. But assuming inflation and annual expenses of $50,000, that amount would run out in less than 10 years, the AICPA said.

"These statistics suggest we are on the verge of a retirement crisis in America," Jordan Amin, chairman of the National CPA Financial Literacy Commission, said in a statement. "Americans don't know how to prepare for their twilight years, and many have put off figuring it out because they're struggling to make ends meet now."

Mark Carruthers, a New York-based certified financial planner who specializes in retirement planning, said many of his retired clients often take distributions from their IRAs or other accounts to supplement their retirement savings.

"I haven't met a client yet who just told me they saved too much for retirement," Carruthers said. "Most people don't start early enough and aren't investing long enough to reach their goal."

Younger workers had the biggest discrepancy between expectations for retirement and how to prepare for it, according to the AICPA. Sixty percent of those aged 18 to 24 said they'll be able to retire, but 74% of those in that age bracket had no idea how much to save to make that happen.  To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.94%4.01%
15 yr fixed3.13%3.14%
5/1 ARM3.14%3.15%
30 yr refi3.95%4.05%
15 yr refi3.20%3.16%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 20,821.76 11.44 0.05%
Nasdaq 5,845.31 9.80 0.17%
S&P 500 2,367.34 3.53 0.15%
Treasuries 2.32 -0.07 -2.97%
Data as of 3:37am ET
Company Price Change % Change
Bank of America Corp... 24.23 -0.35 -1.42%
Spectra Energy Corp 40.68 -0.32 -0.78%
Chesapeake Energy Co... 5.66 -0.09 -1.57%
Hewlett Packard Ente... 22.96 -1.70 -6.89%
Ford Motor Co 12.47 -0.09 -0.72%
Data as of Feb 24
Sponsors

Sections

Baltimore Orioles executive John Angelos said he would want President Trump to apologize for all the offensive comments he's made before he's invited to throw out the first pitch at Camden Yards. More

A draft of the House Republicans' bill to repeal Obamacare would replace its subsidies with less generous tax credits, increase the amount insurers could charge older Americans and effectively eliminate Medicaid for low-income adults. More

Data Refuge collects federal data about climate change in order to preserve the information and keep it publicly accessible. More