Wait, HOW Many Americans Have Nothing Saved
for Retirement?! By Ethan Warrick, Editor, Wealth Authority
We’ve
written a lot about retirement and retirement savings in these posts over the
last several months, and one of the topics we’ve hit on is how the majority of
Americans aren’t saving enough for their golden years.
According
to a recent report on CNBC, a surprising 17 percent of Baby Boomers have less
than $5,000 stashed away for retirement. To put it lightly, that’s not good.
Furthermore, a report from Northwestern Mutual says that only about 16 percent
of all Americans have more than $200,000 saved for their future. About 45
percent don’t know how much they have saved.
This is all troublesome data,
especially when you consider that the majority of employers aren’t offering
their workers any sort of pension plan any longer to help fund their post-work
years. That means that Americans will need to live off money from any IRA or
401K savings account, and Social Security benefits. While the aforementioned
data is worrisome to look at, we recently came across another surprising
statistic from the same Northwestern Mutual report where many of the above
figures came from: About 15 percent of Americans don’t have anything saved for retirement.
Zip. Zero. Nada.
Considering that most financial
experts advise stowing away at least $1 million for retirement, many Americans
are woefully behind. In fact, only about 10 percent of all Americans are
confident they’ll have enough saved to comfortably live in retirement. About 45
percent say they think there’s a chance of running out of money in retirement,
yet the vast majority of those surveyed who indicated this say they’ve done
nothing to remedy the issue.
This is all a pretty big problem,
and it’s obviously very important to save for retirement accordingly unless you
want to be working for the rest of your life. In the next section, we’ll
provide some tips on how to save and some strategies that you should be
considering while you’re saving:
Start
saving as early as possible: As soon as
you land that first job out of college, start saving for retirement. If you’re
able to catch on with an employer that offers a matching program for its 401K
plan, make sure you’re saving so that you’re getting the maximum company match.
This essentially means you’re getting free money each pay period, so it
behooves you to take full advantage of this.
Diversify: It’s great if your employer offers a 401K plan, but
financial experts will tell you that it pays not to have all of your eggs in
one basket. That said, look into opening up an IRA that you can allocate money
into as well. Between an IRA, 401K and Social Security, you should be pretty
well set if you stick to a savings plan and don’t divert from it.
Try to
increase your savings annually: Ideally,
the more experience you gain professionally, the more income you’ll earn. That
said, try to always increase the percentage of your pay you put into your
retirement account by 1 percent each year. Most financial experts say that you
should be trying to invest 15 percent of your pay each year, including company
match. If this number isn’t feasible, try to get on a path where it becomes
doable.
Take
other costs into consideration: Think
you’ve saved enough or are on the right savings track for retirement? Think
twice, as there are a lot of other retirement-related costs that many people
don’t account for. Perhaps the largest is medical costs, as it’s estimated that
senior citizens might pay as much as $250,000 in out-of-pocket medical fees in
retirement. Make sure you’re accounting for inflation as well in your
retirement savings.
Regardless of your age, take the
time to assess where you stand in your retirement savings. Are you on track to
meet your goals and live comfortably in your twilight years? Or are you more
like the professionals that are likely not saving enough? Take stock now, and
make the adjustments before it’s too late.
Comments
The best retirement
investment is owning a single family home you can maintain to appreciate in
value. It is your ultimate protection from homelessness. You also need to work
past age 66 to make sure that your 401K and Social Security Retirement Benefits
cover your expenses. Families will need to assume responsibility for the 10%
who will need support.
Norb Leahy, Dunwoody
GA Tea Party Leader
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