Why Do People Not Save Enough for Retirement?

Good evening!

One of the websites I frequent a lot when just surfing the web is FoxBusiness.com. I enjoy reading some of the investing and personal finance articles on their and usually learn something new when it comes to finance. Since I plan on owning my own business someday, I also like to read up on posts in the small business section.

Earlier this week I came across an article titled “34% of Workers Have Less than $1000 for Retirement.” Yikes! Only $1000!? And that’s for just over one third of workers here in the U.S. That’s just crazy. I know retirement savings can be difficult, but I would have never guessed 34% have this amount or less.

Granted, this takes into account all workers so we’re counting a lot of people just starting out in their working careers in this figure and those in every income bracket. But as I continued in the article I found a more troubling statistic: “More than 70% of workers without a retirement plan like a 401(k) or IRA have less than $1000 to fund their golden years. If workers don’t have something provided by their employee, this means that they are saving virtually nothing on their own.

Hmmm. Seems to me the problem we have in this country when it comes to saving for retirement is the idea of self-sufficiency or lack thereof. If our employer doesn’t offer a retirement plan, it seems we are much more likely to not take the initiative to start a retirement savings account on our own such as a traditional or Roth IRA.

Why is this? Do most people not think they don’t need to save for retirement and that they will be able to depend on social security? Or is it a bigger problem? I think the main reason people don’t start saving or barely save like the $1000 statistic, is the lack of financial education we have. While I know some high schools offer financial education as part of their curriculum a lot of them don’t. Mine certainly didn’t. If it wasn’t for all the old Peter Lynch books and the Rich Dad, Poor Dad books that my Dad had on the book shelf in our living room growing up, I probably would be part of the people with less than 1k saved up.

I think one of the requirements to graduating high school should be learning the basics of personal finance including the various ways to save for retirement and the importance of starting early. If kids today could learn the basics of what an IRA is and the difference between stocks and mutual funds, they would be much more prepared to enter the real world than someone with no financial education. While learning advanced algebra and calculus is cool and all, it only helps people move on to higher levels of education like college (unless you happen to use it in your job). It doesn’t prepare them for real life which personal finances is a big part of. While I’m not saying we should get rid of these classes altogether, I think there should be more of an emphasis on practical skills included as well. You would be much better off figuring this out when you are young and don’t have a lot of expenses so you can pack away a lot of your income to set yourself up with a nice foundation for your retirement. The earlier you start, the more you can take advantage of compound interest and the great long-term growth of the stock market.


What do you think? Did your high school offer personal finance courses? If not, how did you start learning about the topic, was it books like me or other sources like the internet? 



  1. Bang on target, SFZ. The lack of education is the main reason for short term thinking. Its a question Ive been asking for years – why does our education system not teach kids how to save and invest, think long term, teach other essentials such as cooking a healthy meal and learning about nutritional importance, how to fix a car, how to negotiate…the list goes on.

    It is really sad when you think about what coming to these people in a few years who have saved only a $1000 for retirement.


    1. Absolutely R2R, all of those skills you list could really help to make people a more self-sufficient individual before entering the real world and should be included as part of an education.
      In regard to only having $1000 for retirement, I can’t imagine what people in the younger generations are going to do, especially here in the U.S. where defined benefit pensions are becoming a thing of the past and our Social Security program probably won’t even be around by the time I get to retirement age. It just highlights how important financial education is so you can take the steps yourself to get started rather than depending on someone else like your employer or the government to take care of it.
      Thanks for stopping by and commenting.
      Best wishes,

  2. Totally agree. Learning about investing and money should be a core concept in our education system.

    However, I have heard a counter argument that should be kept in mind. Often times, when people learn the basics about investing, it increasing their confidence in their skills, which makes them make risker moves. They trade more, move in and out, and predictably get slaughtered.

    On the plus side, I’m a big fan of making investing mistakes as early as you possibly can. Losing it all when you have $1,000 in the markets is a hell of a lot better than when you have $100,000. Personally, I was an idiot when I started and lost a lot of money. Thank goodness I did! What I learned I will carry with me for the rest of my life, and will make me a better long term investor.

    Long Term Brian

    1. Getting too overconfident could potentially be a problem, especially since the few examples I’ve seen of education about the stock market in school consisted of students taking part in some sort of contest where everyone gets an equal amount of “money” and then trade throughout the year to see who comes up on top. Things like that just encourage people to develop a short-term mindset which unless you’re really talented and willing to devote a huge amount of time, probably isn’t going to work out.

      I completely agree on the need to make some mistakes, it’s the only way to learn sometimes. I’ve been fairly lucky in that regard, probably my biggest mistake was dumping all my money in a bunch of mutual funds when I first graduated high school on the advice of our family financial advisor/insurance salesman that did nothing but lose money until I sold them all once I actually started to learn to invest. I lost money but realized that I was better off taking control of my investing and that high fees will really eat into your returns.

      Thanks for commenting and adding to the discussion,

  3. Yes- “I think one of the requirements to graduating high school should be learning the basics of personal finance including the various ways to save for retirement and the importance of starting early.” A lot of my friends are college graduates- yet have never had a basic finance/accounting class. Everyone should know a little- they are such valuable real life skills!

    1. I completely agree Julie. Basic finance skills are very valuable, especially for those in the millennial generation, since we will have a lot more responsibility when it comes to planning our retirement, compared to the pensions and defined benefit plans that past generations had.

      You’d think some sort of basic finance class would be part of a general education requirement for college since it is not taught a lot at the high school level. I hadn’t thought about that since my major is Business, so I have all the accounting courses I could want and then some. 🙂

      Thanks for stopping by and commenting, have a great week.

Leave a Reply