Data & Research March 14, 2016

‘How Much Have Americans Saved?’

More than half of Americans said in a survey they have less than $10,000 saved for retirement.
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A long list of competing financial priorities—credit card or student loan debt, saving for a child’s education or low wages—are cited as obstacles to saving for retirement, says Cameron Huddleston, Life + Money columnist for GOBankingRates.

However, some people do manage to save, despite these challenges. Retirement savings correlates with a saver’s life stage, according to a new study from GOBankingRates. For young people just starting their careers, simply saving at all could be a sufficient goal, while those nearing retirement are likely to want to have at least a few hundred thousand in their retirement accounts.

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Those likeliest to have no retirement savings at all are Millennials, who are 40% more likely than Gen Xers and 50% more likely than Baby Boomers to have no savings. Gen Xers are making a significant effort to save: 48% have stashed away more than $10,000, and about a quarter of those savers—27%—have saved $100,000 or more.

The top balances can be found in the accounts of Baby Boomers and seniors, who are 85% more likely than Gen Xers to have $300,000 in retirement accounts, and 4.6 times more likely than Millennials to have saved this amount

Of the 42% of Millennials indicating they have no retirement savings, it’s the younger members (ages 18 to 24) who have not started, at 52%. Of older Millennials, ages 25 to 34, the percentage of non-savers drops back to a more reasonable 36%. Younger Millennials most commonly have “less than $10,000” (30%) and $10,000 to $49,000 (11%).

NEXT: Gen X struggles

Just more than half of Gen Xers (52%) still have less than $10,000 saved for retirement. This generation was hit especially hard by the financial crisis of 2008/2009, which cost them 45% of their net wealth, GOBankingRates.com says. Younger Gen Xers are falling farther behind than their older counterparts: most younger members have balances of less than $50,000. Older Gen Xers (ages 45 to 54) are clearly making an effort, with an impressive 40% having balances of $50,000 or more.

As respondents get older, the gap between savers and non-savers widens. A larger portion of those age 55 and older report having high-balance retirement funds, but a significant subgroup still has little to no retirement assets. About 3 in 10 of respondents in this age group have no savings. About one-quarter (26%) report savings balances of less than $50,000. More than half (54%) have balances far behind typical retirement fund benchmarks for their age group.

GOBankingRates surveyed three age groups of approximately 1,500 respondents each: ages 18 to 34; ages 35 to 54; and age 55 and older. Respondents were asked, “By your best estimate, how much money do you have saved for retirement?”

More information about the survey is at GOBankingRates’ website.

Deals & People March 14, 2016

Goldman Sachs Investment Management Acquires Honest Dollar

The Investment Management Division of Goldman Sachs has agreed to acquire the web and mobile-based retirement savings platform, which specializes in the start-up and micro-plan markets. 
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Goldman Sachs’s investment management division says the acquisition of Honest Dollar will help deliver effective investment management and retirement planning services to “the approximately 45 million Americans who do not have access to employer-sponsored retirement plans.”

Readers of PLANADVISER will know Honest Dollar as one of a host of small-market specialist firms to emerge in recent years, alongside firms like ForUsAll, DreamForward Financial, Capital One Investing ShareBuilder 401k, Employee Fiduciary, and Ubiquity Retirement + Savings. The firms have blossomed in the small-plan space by rolling out automated platforms that streamline processes and eliminate back-office paperwork. Most crucially, these firms are driving down costs to the benefit of the participant and the small-business sponsor, who can now afford to access the flexibility (in terms of plan design and contribution levels) and tax benefits intrinsic to the 401(k). (Also see “Small Plans Face Big Opportunity.”)

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Goldman Sachs’ clearly sees something it likes in the Honest Dollar approach to the small-plan market. It says purchase of the Austin, Texas-based Honest Dollar “enables employees of small- and medium-sized businesses, self-employed individuals and independent contractors to quickly begin saving and investing for retirement by establishing individual retirement account (IRA)-based savings programs.”

“Honest Dollar has created a simple solution to a complex retirement savings problem,” adds Timothy J. O’Neill and Eric S. Lane, co-heads of the investment management division at Goldman Sachs. “Together, we have the potential to help millions of people achieve their investing goals.”

Honest Dollar will remain based in Austin upon completion of the transaction, which is subject to certain conditions and expected to close in the second quarter of 2016. More information is at www.honestdollar.com. 

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