The Wall Street Journal recently reported that if Americans put 3% of their salaries towards a retirement plan, it still may not be enough for a comfortable retirement.
The problem is many people don’t even want to part with that 3%. In fact, almost half of the people surveyed had no retirement funds at all. And many of those who are contributing to a 401(k) are not putting in the required amount to get their full employer match, leaving $42,855 behind on average per year.
As these people get closer to retirement, the savings crunch can be extremely stressful and the well-deserved break may not seem possible.
Why the Increase Concern Over Retirement Savings?
There are a few reasons why a lack of retirement funds are becoming more of a concern.
First, Social Security is meant to be a supplement to your retirement savings. Unfortunately, it’s estimated that reserves will dry up by 2033, leaving many without this supplement.
Another reason for concern is simply because people are living longer (which is what’s fueling the Social Security problem). While it’s fantastic our healthcare has come so far, healthcare is also expensive. You need to anticipate having funds for expensive and frequent healthcare charges in your senior years.
And finally, seniors are carrying more debt. Some are still paying off higher education!
Good News: Millennials Appear to Be Managing Finances Well
A study found two interesting points:
- 75% of millennials track expenditures compared to 64% of baby boomers.
- 67% of millennials have a budget compared to 55% of baby boomers.
- Millennials are much more open to seeking financial education and advice.
While these percentages are encouraging, many are still lagging behind when it comes to retirement savings. When asked why they aren’t contributing more to retirement, they cited:
- They can’t afford to part from any more money
- Student loan debt is too high
- They need to pay for their child’s education
- They don’t have an emergency fund established
Quick Savings Tips
Our blog has many articles about saving money and how to make it easier. Click here to check out the archives. Here are some popular savings tips:
- Automate your savings by direct depositing a certain percentage away.
- Cut out luxuries like buying a lunch, going out every week, getting morning coffee every day, etc.
- Research and find out if you can get better deals on services like cable, Internet, mobile phones, insurances, etc.