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Why Millions Of Americans Are Falling Behind On Retirement Savings

America is a nation divided and if we don’t get the situation resolved, we could be headed for catastrophe. I’m not talking about politics and possible civil strife – I’m talking about a retirement cataclysm – millions of elderly Americans unable to fund their post-career lives.

While the richest American households are cruising towards a well-funded retirement, a huge percentage of the population has little or nothing saved. Specifically, the top 10% wealthiest households have saved an average of $413,000, according to Federal Reserve data on savings. Thirty-five percent of the rest of us have nothing saved for retirement. Among households that have socked away some dough, the average balance is just $73,200 – about 15 months of living expenses for the average household.

This disparity is largely the result of two factors. First, over the past several decades the American retirement system has changed from a paternalistic arrangement where company pensions, which required nothing more than loyalty, provided a solid retirement income for many workers, to a system that requires most of us to self-fund our retirements through savings, often with the help of an employer-sponsored 401(K) or similar tax-deferred savings program. And let’s face it: We’re not really a nation of natural savers anymore. We haven’t been since the end of World War II.

Related: How To Catch Up On Retirement Savings

That reality is made worse by the fact middle-income Americans have had less to save in recent years, compared to those highly compensated “10 percenters.” In 2014 those top-earners made an average of $162, 180 – up 6% from a decade earlier, after adjusting for inflation. Middle incomes, meanwhile, have barely stayed ahead of inflation and lower-income households are actually making less than they did in 2005.

This doubly fuels the divide between the retirement-haves and have-nots. Most obviously, the more you make the easier it is to save. But, also, the less money you make, the more likely you are to dip into your retirement funds to meet an emergency expense or weather a job loss.

As if this wasn’t enough, many middle and lower income Americans don’t have access to workplace retirement savings plans, such as a 401(k). These plans offer all sorts of benefits, including tax deferrals and employee matches. But perhaps most importantly, participation in such a program forces (or at least encourages) automatic savings. The employee’s contribution comes straight out of their pay and into their retirement account. You can’t spend what you never see, right?

About 80% of high-income earners have access to a 401(k) while just 35% of low-income workers can access such a plan. That’s because large businesses are more likely than small firms to offer a retirement plan – and small business has created most of the new jobs since the Great Recession. What’s more, since that downturn, many people have become members of the “gig economy,” essentially bouncing from company to company as freelancers. These folks also lack access to a 401(k).

Of course, there are 401(k) alternatives for those who don’t have an employer. They can start saving today with an IRA – traditional, Roth or SEP. Most large banks even make it possible for you to sweep money straight from your checking account into an IRA, replicating the 401(k) benefit of auto-saving.

But many people, especially lower-income earners may be hesitant to use these tools. The risk of losing money, the complexity of investment choices and required fees likely keeps some eligible participants out of IRAs. That’s why the Treasury Department created the MyRA program in 2014.

A MyRA is a barebones IRA-type account with no risk and no fees. The trade-off for those benefits: low returns. You can open a MyRA with a minimum $25 and contribute as little as $5 each pay period. The annual contribution limit is $5,500. When the account reaches $15,000 or 30-years of age, it must be rolled into a private-sector retirement account. The MyRA program invests your contribution in government-backed securities, which average a very modest (but safe) 2%-3% annual return.

If we don’t close the retirement gap, our social services will be strained by millions of Americans in need of various forms of assistance – both public and private. Housing, food and transportation will become serious issues for these under-funded retirees.

There have been calls for the government to “do more” to pump up our collective savings. But what can our leaders really do? This one is on us. Regardless of where we are in life, we all need to take a close look at our retirement savings situation and, if necessary make some hard decisions about how we are going to insure our own post-career life.

After all, taking responsibility for our own future is as American as turkey and pumpkin pie on Thanksgiving.

Related: 3 Reasons Why You’re Not Saving And Budgeting For Retirement – And What You Can Do About It

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