Saving for retirement is a common financial goal, but it’s often easier said than done. A new survey suggests that despite the pressure to plan for the future, retirement savings rates have dropped. Meanwhile, concerns about not having enough money in retirement have risen. If you haven’t saved much for your golden years, keep reading to see how you compare to the rest of the country.
Find out now: How much do I need to save for retirement?
The Number of Savers Is on the Decline
According to the 2016 Franklin Templeton Retirement Income Strategies and Expectations survey, just over 40% of respondents said they weren’t socking away anything for the future. In 2014, that figure was closer to 35%. So what accounts for the change?
For some, wage stagnation is part of the problem. According to the Economic Policy Institute, wages for middle-class workers have risen just 6% between 1979 and 2013. That’s an increase of less than 0.2% per year. At the same time, inflation increased between 2015 and 2016.
Running out of Money Is a Major Concern
Among survey respondents who were 11 to 15 years away from retirement, 77% said they felt stressed about their savings. In fact, having enough money in retirement proved to be the most pressing concern overall. When asked to rank their concern levels about various retirement issues, 30% of the survey participants said that running out of money was their primary source of stress.
Younger savers seemed to be more concerned about falling short in retirement. 32% of the millennials who were surveyed said that running out of money was their number-one fear, while 29% of baby boomers said they were more worried about having health problems in retirement. Interestingly, 70% of the baby boomers said they were confident that they could rely on Social Security while 69% of the millennials said they were counting on their 401(k) to provide them with sufficient retirement income.
See what your Social Security benefits will be.
What Workers Can Do to Curb Their Fears
Whether you’re five years or 25 years away from retiring from the workforce, the prospect of ending up broke can be quite frightening. But you don’t want your fears to keep you from working towards your long-term financial goals. Taking the following steps can boost your confidence and prevent retirement from being a major source of stress and anxiety in your life:
- Start saving, if you haven’t already. You probably can’t afford to put off saving for retirement. Even if you can only save $50 a month, that’s a starting point for growing your nest egg.
- Max out your tax advantaged accounts. A 401(k) can be an excellent retirement savings tool. If you’re not contributing that much to your 401(k), it’s a good idea to see if you can divert more of your salary into your account. Once you top off your 401(k), you can look into funding an IRA or a health savings account (if you have a high-deductible health insurance plan).
- Dump your debt. If you’re still paying off student debt, credit cards or other consumer debt, now is a good time to dump those loans. It might be wise to consider refinancing your student loans or using a low-interest personal loan to consolidate your credit card debt. The sooner you can kiss your debt goodbye, the sooner you’ll be able to start beefing up your retirement accounts.
Try out our student loan calculator.
Stress can take an extreme toll on your physical and mental health and it doesn’t do your wallet any good either. Facing your retirement fears and looking for ways to minimize them is the best thing you can do for your financial future.
Photo credit: ©iStock.com/Rasica, ©iStock.com/monkeybusinessimages, ©iStock.com/AndreyPopov