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New Yorkers React To Retirement Numbers, Exclaiming ‘Who Could Save That Much?’

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New Yorkers React to Retirement Numbers, Asking ‘Who Can Save That Much?’

In a recent discussion about retirement savings with Vox, Labor economist Teresa Ghilarducci She set some strict criteria: By age 30, you should have saved twice your annual salary; by age 40, you should have saved two and a half to three times; and by age 60, you should have saved eight to 10 times. Those numbers left many New Yorkers, like Vanessa Longshaw, a 34-year-old vice president of communications, stunned. “You can see I’m laughing because who can save that much?” she said.

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Ghilarducci acknowledged this stark reality. “I know that real Americans don’t have money,” she said. “There’s a huge gap between what you’re supposed to have and what people actually have.” John Scott, director of the Pew Charitable Trusts’ Retirement Savings Project, echoed that sentiment when he pointed out that the average retirement savings for non-retired Americans is about $45,000, meaning that half of Americans have less than that.

Steven Druckman, a 50-year-old playwright and college professor, acknowledges his impotence with a mixture of resignation and humor. “Well, well, I have some work to do,” he admits, then laughs nervously. He has about $250,000 in savings and a TIAA Cref plan that could grow to $500,000 if he keeps working. “I’m actually close to that, now that I think about it,” he says, sounding cautiously optimistic.

The fundamental issue, Ghilarducci explains, is a systemic one. “The reason a coal miner and a lawyer expect to retire is because of the design of our pension system, which no longer exists,” she says. Traditional pension systems, which once provided a secure retirement, have largely been replaced by old-fashioned pensions. 401(k) plansshifting the burden of saving and investment to individuals.

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“The federal pension law changed the rules, making the traditional pension less attractive to employers,” Scott noted. The 401(k), which was originally intended to be a secondary savings tool for high-income individuals, has become the primary retirement savings tool for most Americans.

For many, the transition has been a challenge. Irma Bridgewater, a 72-year-old retired nurse, recounted the struggle of maintaining her savings while managing two mortgages. “Having to draw on it all the time … I feel like it’s killing me,” she said. Younger workers, like John Cifuentes, a 27-year-old civil engineer, struggle. With a salary of $105,000, Cifuentes understands the need to save but struggles with the complexities of retirement planning.

Vanessa Longshaw, who earns $140,000 a year, is struggling with the same issue. After living and working in the U.K. for six years, she has about $15,000 to $16,000 in her 401(k) and contributing to a Roth IRA. “I was living my 20s on a shoestring,” Longshaw admits. “I made some mistakes.”

The lack of universal access to retirement plans exacerbates these challenges. “Half of workers do not have the means to save for retirement,” Ghilarducci stressed. This contrasts sharply with other countries where workers are automatically enrolled in retirement plans. In the United States, individuals must actively choose to save, often without adequate financial education.

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This article New Yorkers React to Retirement Numbers, Asking ‘Who Can Save That Much?’ Originally appeared on Benzinga.com

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