A new survey found a shocking number of Americans haven't saved a penny toward retirement. Many don't realize that the benefits of saving sooner rather than later can make all the difference. NY1's Tara Lynn Wagner filed the following report.
For the first time, Bankrate decided to ask Americans how much they've saved for retirement. The answer is alarming. Over a third of those polled—36 percent—said they haven't saved a dime.
"They have nothing. Maybe there's some money under a mattress somewhere, but as far as into an actual account somewhere that's accruing interest, there is no savings for these folks," says Bankrate.com Research and Statistics Analyst Chris Kahn.
That's especially true for younger workers, which isn't really surprising. The older they get, the more likely it is that they've started to squirrel something away, but not everyone. A full quarter of respondents between the ages of 50 and 64 have yet to start saving.
Bankrate's Research and Statistics Analyst, Chris Kahn, says these numbers tell him two things.
First, that a good number of Americans are living paycheck to paycheck; and second, that they're going to need to keep working so those paychecks keep coming in.
"That's a tough thing to say to somebody who doesn't want to, who has already worked for a very long career, but if you haven't saved and you're close to 60, you're going to be working into your 70s," Kahn says.
As for younger workers, he says time is on their side and they should use it wisely.
"You can't deny the power of compound interest. I know that sounds really wonky, but just think of it this way. Say you put $200 away every month and you put that in some kind of interest bearing account, most likely in 10 years that's going to grow to about 60,000 dollars," Kahn
Now let's stretch that even further. According to the website's IRA Savings Calculator, if you start putting $200 every month in an IRA when you are 25, by the time you are 65, that account will have grown to about $512,000 dollars. It's not enough to retire on, but it's something.
Now, start that same system when you're 40, and you'll only end up with about a third of that amount. The longer you wait, Kahn says, the more you'll have to put away to play catch up.
"We're not talking about a few hundred dollars a month anymore. We're talking about 10% of their paycheck. 15, 20, 30% of their paycheck now needs to be going somewhere if they're expecting to retire," Kahn says.
His advice: whatever your age, take a good hard look at your budget and find ways to cutback on today's expenses so you can save for tomorrow's.