I find these numbers to be very hard to believe. I seem to remember there being studies from a couple of years ago when the market was much lower that cited averages being in the mid $40,000s an another study with a number closer to $80,000. So the market is up 75% from the low but averages savings has cut in half (or more)? Could people really have taken enough out to pay their bills such that the average balance is that low after the market has gone up so much?
Regardless of the accuracy of the number--there is no way I believe $20,000 is a representative number--none of the above dollar figures are good in terms of thinking about the country's various looming problems. The numbers are bad on multiple levels actually.
The first thing is that the entire framework is defective in that the sample size thinks they only need $300,000 to fund their retirement. Here I am thinking that by "retirement" they mean something pretty close to a life of leisurely pursuits in a conventional sense. In many past posts I've mentioned the 4% rule for portfolio withdrawal, more specifically 1% per quarter, with the context being whatever you got 4%. Generally speaking this is a widely adopted rule of thumb that I can tell you many people have trouble with and to add another layer of futility some in the industry are now questioning whether 4% is too much to be sustainable. It seems like this is gaining traction.
That people apparently think so highly of $300,000 is a commentary about financial illiteracy. Assuming someone could make it on $12,000 plus social security, they would be blown up after their first five figure unexpected event (more on this below).
It is difficult to generalize and say people should save more money but of course for everyone who does not save the way they should there is surely a story behind their lack of savings. You should save more is easy to say but actually doing this requires people taking their own initiative not someone telling them.
To circle back to retirement difficulties I've brought up before; $1 million certainly sounds like a lot of money. Using the 4% rule that would generate $40,000 per year. Unfortunately the typical person who accumulates that much in savings did so while living a lifestyle that was much larger than $40,000. This is a square peg (maybe a $100,000 lifestyle) round hole ($40,000 plus social security) situation. Something will have to give.
There is another point that I have made before that showed up in at least one of the comments on the article as follows;
I retired this year and my largest expense in health insurance that costs me in excess of $1,200 a month. I could go on and on, the facts are unless you have income from multiple sources your screwed. I set a monthly goal and every month I get an unexpected bill. I will probably have to go back to work.
The dreaded one-off expense! I don't know how many times I've written about this and the commenter has one every month. Things like new tires, unexpected dental events, unexpected veterinary events, something with your house and there are plenty more examples. While these things cannot be specifically planned for the prudent course of action might be that whatever monthly number you think you can live on, pad it by $1000. Another $12,000 per year means another $300,000 in the portfolio. I'm sure no one thinks that would be easy.
Clearly some folks who want a conventional retirement will save enough money to do so successfully but that will not be the majority. The sooner everyone looks themselves in the mirror, figures out where they are in relation to where they need to be and accepts that they must live within their means the sooner they can figure out their own solution.
Two things that I would focus on is getting the overhead down and find something you love to do and figure out how to make a little money doing it. Someone who is 55 and wants to "retire" at 65 has ten years to figure out how to do this. A monthly lifestyle of $4000, with another $1000 for one-off and another $5000 a year for a vacation requires $1,625,000 to work as a portfolio-only solution. If social security is still functioning that might be $2500-$3000 per month and if another $1000 can from some sort of enjoyable vocation then the portfolio need drops to $425,000 (although having more than that would be better).
There is nothing about this that will be easy. However much you can save, try to save more. To paraphrase Woody Allen, there is no problem where having more money made it worse.