Why many Americans aren’t steadily saving for retirement
Retirement means different things to all of us. One thing is certain: you need your retirement savings to work for you.
According to a Stanford Center on Longevity report, researchers recommend putting away 10% to 17% of your annual income starting at age 25 to retire at the sought-after age of 65. A survey conducted on short-term and long-term savings shows that 69% of Americans aren’t putting away this recommended amount.
While the significance of setting aside money for retirement has not changed over the last few decades, prioritizing saving has become less prevalent for a number of reasons.
Many Americans, particularly the younger generations, are overcoming enormous financial hurdles. A MarketWatch report suggests that, by age 35, one should have twice their salary saved for retirement. But student debt, high rent, car loans and other expenses make this a challenging goal. Plus, living a middle-class lifestyle is 30% more expensive now than it was 20 years ago. College, housing and childcare continually rise in cost, while salaries remain stagnant.
On top of barely earning enough to cover expenses, some people don’t have access to a retirement plan. For those who do, taking responsibility for your own retirement savings has become more important as private-sector employers pull away from pensions and shift toward defined-contribution plans. Add in the uncertainty around Social Security and retirement starts to become a scary idea.
It's never too late to get yourself on the road to retirement savings. Here’s what you can do right now to start saving:
Automate your savings. Have a portion of your paycheck put into a retirement account such as a 401(k), Roth IRA, traditional IRA or other savings account. Auto-saving will help you resist the temptation of unnecessary spending.
Broaden your participation in your employer’s savings plans where available.
Bank your surplus money. Whether it’s a bonus or a birthday check, unexpected windfalls are easy funds to save.