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Today we're crunching the numbers on retirement in America to see if we're walking on sunshine or stumbling down the boulevard of broken dreams. So let's give a Cub Scout salute to Deleteme for sponsoring the channel and hop right in. All right, the stats we're looking at today fall into a few main categories. The first of which is people who are unprepared for retirement. Which brings us to stat number one. The median total household retirement savings among all Americans is just. $56,000. Hi, caramba. At a conservative withdrawal rate of 4%, that would create an income of only. 2,200 bucks a year. Oh, we're screwed, guys. We are screwed. I'm gonna run out of paper towels at this stage. Golly, that is the worst vodka I've ever had. I just want to put that out there. But really, 2,200 bucks a year, that's $186 a month. I hope your family loves you enough to cover your bills for the rest of your life. Now, let me remind you, this is the median among all Americans, to be fair. So that 22 year old, that 45 year old, they're baked into the stats, too. That gives me some hope that there's still some time to build serious wealth. Let's not end there. Stat number two. 66% of people saving for retirement worry they'll run out of money. Now, I see two reasons for this, one of which goes back to that last step. People just don't have much money saved, and they know it, but at least they're self aware. But reason number two for this widespread panic is that most of these people have never actually sat down and calculated how much money they'll need in retirement to cover the type of lifestyle they want to have. In fact, half of the people who estimated their retirement savings needs in a recent survey landed on the number they gave by guessing. Just vibes. And this is exactly why one in five savers plans to live only off the growth of their retirement and never touch the original principal balance. And funny enough, one in five of you have yet to subscribe to my channel. So why not take care of that right now, Give it a little click and give the video a like while you're at it. All right. Stat number three on our list, 48% of US workers plan to continue working after retiring. Bit of an oxymoron, no? It's like Michael Jordan temporarily retiring from his basketball career to start a baseball career. An ill fated move that delivered on zero promises. Except for some great scenes in Space Jam. Killer movie. Space Jam 2 stinks though. LeBron ruined it.
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LeBron James. LeBron James. LeBron James.
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Now, there's nothing wrong with choosing to work on passion projects or get a part time job after you retire. It can actually be a great way to keep your brain sharp and make sure you don't turn into a loaf of Wonder Bread on the couch. My guess though, is that the people the stat refers to aren't making that declaration from a desire to keep their spirit engaged. It's likely because they know they'll need the money. They're working because they have to, not because they want to. That's the delineation here. And I hope that you work because you want to later on in life because you planned for that. All right, the final stat in the unprepared category, only 27% of Americans have long term care insurance. Which is crazy because an estimated 70% of Americans over 65 will need long term care. So what is long term care exactly? It's basically any situation where someone needs ongoing help to take care of themselves. That could be a nurse coming to your house, moving into assisted living, or even a full nursing home. And it's something most people don't think about as they play offense building wealth. They hope it never happens to them and they never plan for it. But it turns out you also need to play defense with wealth too. Sorry. Real sports kick today. Watched my first one this weekend. Very exciting. Both teams had a great time from what I could tell.
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The team, the team.
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Go team. Go sports. Now I recommend getting long term care insurance when you turn 60. No better way to celebrate your 60th than getting long term care insurance. And subscribing to the Reader's Digest large print edition, the national median cost of just one month in a nursing home is close to 10 grand. One month. 10 grand. So with the average nursing home stay being 13 or 14 months, you're talking low six figures. And that's on the shorter side. Some people can stay at a nursing home for two, three, four, even five years. Years. And that can really wipe out the nest egg. And while the premiums on long term care policies are expensive, it is worth the transfer of risk to the company instead of your nest egg. Which by the way, is the whole point of insurance to transfer risk that you don't want to or can't take on yourself. Moving on to our next category of stats. The first handful dealt with being unprepared for retirement. These next few center on people actively moving in the Wrong direction. First up, the number of Americans actively investing has fallen to 42%. When people are behind on retirement, it's usually few main culprits, one of which is never getting started in the first place. Now people love debating investing strategies, but over half of America isn't doing anything. Which is why ultimately I'm less concerned about whether you prefer index funds or mutual funds or ETFs or any other nitpicky debate like that. I'm more concerned you're doing jack squat, which is my least favorite type of squat. Closely followed by the Bulgarian split squat. The cold war's over, guys. We don't need to do that anymore. It was a time of war. Every time I've checked investing $0 leads to approximately $0 in growth. But let me check again just to make sure. Yeah, still zero. And if the reason you're not investing is that you're not sure what to do, I can help with that. Dave Ramsey and I are doing a two night virtual live event called Investing Essentials on September 1st and 2nd and we're going to break down his playbook for investing and wealth planning. So on night one we're going to cover the investing basics, think one on one, 201, 301 stuff, 401ks, optimizing mutual funds, even real estate investing. And then night two, we're going to introduce all new wealth planning content. Reducing taxes, make sure the government doesn't take more than they should. How to hand off the money to your kids in a way that doesn't destroy them. Wills, trusts, you name it. So get your tickets using the link in the description. I'll drop it down there and I hope to see you at that virtual event. So non vesting in retirement is a great way to not have it, but not doing it early enough can also hurt. So let's see what that procrastination is costing Americans. With our next stat. A 10 year delay in saving can reduce retirement assets by 38%. 10 years, 40% reduction. That is crazy. Compound growth is a powerful tool, but it only works if you give it enough time. Let me show you using my handy dandy investing calculator. So for this example, we're going to take someone who invests $1,000 and and lets it grow for say 20 years. Let's see what happens there. So let's say you start investing at 35, you leave it until 55, no monthly contributions, you're just going to put in your thousand bucks and let it ride for 20 years. And we're going to go with a 10% rate of return $7,328 you7 extra money just by letting it sit for 20 years. Now let's use a different example. We're going to have someone who invests $2,000 so they double the investment, but they had far less time. It grew for a decade instead of 20 years. So we're going to go current investments 2000 age 45 to 55. They got a later start. Double the investment turns into $5,400. So 5x instead of 7x and the numbers hockey stick as you get further and further out, 30 years, 40 years, the numbers get pretty wild. So that's pretty shocking to see that it's not necessarily the amount you put in, it's how early you start and how much time you have for it to grow. So moral of the story, get out of debt now. Build an emergency fund now so you can focus all of your energy toward investing as soon as possible. But still, there's an even worse mistake than delaying investing, and that is taking money out of retirement early. Which brings us to the final stat of this section. 30% of workers have taken a loan from hardship withdrawal or early withdrawal from retirement savings. Now, I've done entire videos on why this is such a problem. So let me give you the TL doctor Taking money out of retirement before you actually retire unplugs the power of compound growth on top of potentially triggering penalties and taxes. And we've got enough to be triggered about these days. Everything is triggering to you guys. Stop being triggered and your life will be better. That's my graduation speech. As we go on, we remember all the times we were triggered together. I'm not going to do the rap part. You don't deserve me at my best, so you're not going to get me at my worst. I think that's how it goes. That's not how that goes. Now, I get that financial emergencies do pop up, but a 401k withdrawal is not the solution. Instead, you should plan for emergencies by having three to six months of your typical expenses in cash in a high yield savings account. That's the ticket to keeping your investments invested. Okay, the next set of stats covers people who believe they're prepared for retirement but are actually just as vulnerable as those making the mistakes we just went over. So first stat in that category, for 53% of retirees, Social Security is their primary source of income. Now, lots of people think Social Security will be there to bail them out in retirement, so they do nothing about it and go, well, the government will take care of me. Cause I worked for 40 years at the plant. The problem popped. It's not that much money. The average Social Security payout is only around $2,000. Even worse, a report from the Social Security Administration's own website projects that the Security Trust Fund reserves will be depleted in 2034. Now that doesn't mean the end of Social Security. It just means that benefits could be automatically reduced by roughly 20%. Which is serious when you're talking about someone's paycheck in retirement. So bottom line, you can't rely on Social Security. And the younger you are, the less I would rely on it. It's less of a standalone retirement plan and more of a cherry on top of your Sonic strawberry passion fruit frozen refresher. Why is that a thing? God only knows. Another stat that should put the fear of God in you. 47% of retirees expect family or friends to take care of them if they need assistance later in life. And this one honestly breaks my heart. It reflects a lack of personal responsibility. It reflects someone who's maybe had a hard life, who never learned how to invest, maybe had some things happen that caused them to not invest, but the responsibility still falls on them. And this puts an incredible burden on the next generation and their children. This stat is exactly why the term the sandwich generation was created, which refers to adults, often between 40 and 60, who are simultaneously providing financial support for their aging parents while trying to take care of their own children. So please, I am begging you, do not put your kids in that spot later on in life. Just because I change my kids diaper doesn't mean they should return the favor later on in my life. But they can bring me a warm glass of milk in my Reader's Digest large print in my readers please. So at the end of the day, your retirement is your responsibility. No one else's. No one's coming to save you. So let's get to it. Saving ourselves. Also your responsibility. Picking a bank that won't screw you over. Which is why I always recommend Fairwinds Credit Union, a sponsor of today's video. Most savings accounts right now are paying less than half a percent, which means your money is basically sitting there collecting interest slower than a frozen lasagna cooks in the oven. And Fairwinds lets you ditch the dusty old savings account by offering a high yield savings account with competitive APY and 0 sneaky fees. So you actually get to keep your hard earned money and grow it. And I love their smart bundle, which comes with a fee, free checking account, plus that high yield savings account all in one place. So open yours in minutes@fairwinds.org Ramsey and before we get to the final three retirement stats, here's a different kind of stat for you. The majority of people overpay for their phone plan. No source needed. Because if you pay more than 25 bucks a month, you are overpaying. Which is why I recommend switching to Boost Mobile, another sponsor of this episode. Their unlimited wireless plan is just 25 bucks a month, forever. Best of all, switching is super easy. I did it from the comfort of my living room in just a few minutes. And you can keep your phone and your number, so don't miss out on the savings any longer. Head to boost mobile.com Ramsey to make the switch. $25 forever requires customers to remain active on Boost Unlimited Plan. All right, back to the stats. Up next, 52% of American retirees left the workforce sooner than expected. Too soon. I hate. I hate. I don't like when people say that. I only like it when it doesn't apply. That one actually makes me happy. This one, it applies pretty aggressively. They retired too soon. Everyone assumes they'll have a shiny path to retirement. Just work 30 to 40 years, get promoted a few times, send the kids to college, endure a handful of excruciating team Happy hours at 6pm Bada Bing, bada boom. Retired. But clearly, life's not always so peachy. Among the 52% who left the workforce early, 47% retired due to employment issues, 40% retired due to health issues, and only 24% retired because they could actually afford to. That's pretty shocking that one in four people could retire because they could afford to. The rest didn't really have a choice. So moral of the story, you never know what's gonna happen. So you should be building for the future and not assume that you're gonna retire on the day you hope to. And you know what happens when you assume. It makes an assumptive person out of you, not me. You're welcome, homeschoolers. Your mom's not gonna walk in the room and make you turn this off. All right, final stat in the you think you're prepared, but you're actually not. Department 25% have no will trust, power of attorney, advance directive, or related legal documents. Remember when I said earlier that retirement isn't just about money and playing offense? This is part of that. Good retirement planning includes preparing for after you're gone, something far too many people don't realize and I got a hard truth A bonus stat for you, if you will. 100% of people will die. Unless you're Jesus, in which case you gotta pass Resurrected three days later. Baby, do I have to do all the evangelism around here? Golly. So what do you need to do to make sure you're prepared? Well, starting point, everyone over the age of 18 needs a will. It may feel morbid to think about your your own demise, but it's the best way to love your family after you're gone. Aside from requesting Black Eyed Peas, Boom boom pal for your funeral playlist, let's play this out. If you don't make a will, what happens? Well, the government gets to make the call on where your assets go. And let me tell you, they don't exactly have the best track record with, let me think here, anything except hiding UFOs. They're good at that. All right, we've got one stat left to go. And it's the good kind one that's all about people who are doing things the right way. People with high financial grit have 49% more retirement savings than people with the same income. But low financial grit and Goldman Sachs, who conducted the study, defined financial grit as, quote, the blend of determination, ongoing growth, and resilient optimism that enables people to pursue long term goals in the face of obstacles. Well, in that regard, I am the grittiest man alive, financially speaking. Still waiting on the call for the remake True Financial Grit. I'll wear an eye patch. Me and Jeff Bridges, we could do like a little, you know, good cop, bad cop situation. But I do like that definition of financial grit. You need all of those things to build wealth reliably, and that takes a lot of intentionality and focus. That said, you also need a quality investing plan, which is why I made this video breaking down the exact strategy I use to build wealth. So click here to watch it next or use the link in the description. That's it for today. Thank you guys for watching. We'll see you next time.