If you have been on social media lately, you will see that early retirement seems to be a trending hashtag. However, for Americans, it is unlikely to be the standard for most of us. With the way things are currently going, America’s saving practices show that many people will may not even be able to retire.
Recent Federal Reserve statistics show that approximately a quarter of working adults do not have a retirement savings plan, nor will they be receiving any pension at the end of their careers.
It may not come as a surprise that many younger Americans do not have a retirement savings plan. Forty-two percent of those age 18 to 29 years old and 26 percent of 30 to 44 years old have nothing saved for their future. However, this can be said about the older generations of Americans, as well. The Federal Reserve reported 13 percent of workers over the age of 60 do not have savings for retirement.
Millions of working Americans are worried about having enough money to retire. Or if they will be able to retire at all.
A Bankrate survey on 2,000 American workers was recently published, which shows that 30 percent of participants have increased their savings rate last year and are continuing to do so. However, the rest of the participants (70 percent) said that they are putting in the same amount, or even less, due to either being okay with their retirement or because their income has decreased. Others in that percentile stated that they had other financial responsibilities that took precedence over their savings, such as an increase in living expenses. Some even just haven’t thought about starting savings.
There was another survey by T. Rowe Price that shows that over half of American adults with children consider paying for a college education is more important than saving up for future retirement. Out of 1,000 survey takers, an incredible amount of 68 percent of people said they would rather delay retirement to be able to cover their children’s college. 24 percent of the 1,000 stated that they already used their retirement savings to pay for a college education.
Chief Financial Analyst, Greg McBride, from Bankrate, states that with reasons that Americans give about not increasing savings rates or giving priority to savings due to other financial priorities such as living expenses or just not having time to really start shows that there isn’t a change in priorities of savings.
It can be said that without surprise, the Bankrate survey revealed that workers making under $30,000 annually are more likely than workers earning $75,000 or more to have lowered their savings either last year or this year.
Even though the cost of living is skyrocketing in the U.S., not having a high income is not an excuse to not save for your retirement. It is always best to save what you can, even if you have to start at pennies.
By putting in what you can, especially at an early age and continuously, to investment accounts with tax advantages like a 401(k) or IRAs, it will make retiring possibly easier even without a high paying salary.
Many financial advisors state that treating your retirement savings as an expense that is the first thing taken from your pay helps to make your retirement a priority. A common way to calculate how much income you need to have before you can retire is by taking your annual goal amount and dividing it by 4 percent to get the total amount. Once you have that amount saved up, you can retire without concern.”