Don’t have enough tucked away for retirement? According to a recent article published by USA Today, you are not alone. According to a new national survey, many individuals heading towards their golden years have very little extra money saved for retirement and have given little thought to what they might do when they can no longer work.
According to a telephone survey of 1,000 workers and 501 retirees from the non-profit Employee Benefit Research Institute and Greenwald and Associates, a whopping 36% of workers “have less than $1,000 in savings and investments that could be used for retirement, not counting their primary residence or defined benefits plans such as traditional pensions.” Another 60% of workers have saved up to $25,000, but the savings will fall far short of what they will need to quit working.
Very few workers calculate retirement costs
It’s easy to see why so many workers fail to meet their retirement goals- one expensive healthcare crisis, divorce or job loss and savings can be quickly depleted, but what is more concerning is that up to 44% say they have not even tried to calculate the costs for retirement.
Not surprisingly, as with any goal, if you don’t know where you’re headed you are unlikely to reach your goal. The survey also noted, not unexpectedly, that workers who had simply made the calculations were more likely to have higher savings rates.
What’s even more disconcerting is those who do not have any type of planned retirement account such as an IRA or a 401k tend to have the least amount saved. In fact, these workers generally had less than $1,000 saved for retirement.
Why aren’t workers saving more for retirement?
The reasons most workers are failing to save enough for retirement don’t surprise anyone. The top two reasons given reason include the cost of living and high day-to-day expenses. It’s not surprising with inflation and stagnating wages more and more workers are finding it more difficult to stretch their wages to cover daily expenses.
Interestingly, optimism remains fairly high for most workers that they will be able to retire comfortably. In fact, 18% of workers in 2014 believe they can retire comfortably, up from 13% who were very confident in 2013. The workers with the highest confidence are not surprisingly those who are in the highest income ranges and who have retirement accounts.
Successful retirement planning
How severe is the crisis? Experts are concerned, claiming that in the next 20 years if things don’t change there could be a real financial crisis for a large percentage of the U.S. population.
So what do you do to avoid a retirement crisis? Retirement planning and financial education are important, but you have to take the next step which includes creating a budget and start saving. In fact, experts recommend that anyone older than the age of 40 should be saving 20% of their income. Workers should also invest in their company’s retirement account up to the match. Finally, sit down and crunch the numbers.
What will happen if you don’t save enough money…you will have to keep working and will not be able to retire at 62 or 65.
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