When it comes to budgeting, so many parents are more focused on making it through the end of the month with their finances intact than looking down to the future decades from now. But adequately saving for retirement is one of the most important ways to ensure a comfortable end of life — and lack of planning now will come back to bite you in the butt later if you’re not careful.
That being said, it’s not as easy as putting money away, as student debt, mortgage payments, flattened wages, and even a lack of access to a company-sponsored 401k can make saving a lot more difficult than setting it and forgetting it. And now a new survey shows that half of Americans don’t have enough money for retirement saved now to put them where they need to be when the time comes.
According to CNBC, data from the most recent Federal Reserve Survey of Consumer Finances for 2019 found that Americans aren’t saving enough to have a comfortable retirement. “Approximately half of Americans are at risk of not being able to maintain their pre-retirement standard of living after they stop working,” Angie Chen, a research economist at the Center for Retirement Research at Boston College said to the publication.
On average, the amount of savings Americans have for retirement is $65,000. However, that’s an average across all age groups. When it’s broken down into groups, it’s still clear that a whole lot of people aren’t saving enough.
Americans between the ages of 55 and 64 have approximately $134,000 savings on average, which is still way below what it should be. People who are under the age of 34 still have a lot of time to save up before retirement age comes, but with a median savings amount of $13,000 – that’s not enough either.
In fact, people should be saving at least 10 to 15 percent of their pre-tax salary for retirement and should retire with enough money to follow the 25 rule — that you should have 25 times your planned annual spending saved up before you retire. That means that, if you plan to live on something like $30,000 a year, you should have $750,000 saved up, per NerdWallet.
“The best thing people can do is to save early and save consistently,” she explains. But could save and should save often butt up against the reality of our lives.
With 60 percent of workers between 40 and 73 putting less than 10 percent of their income into retirement savings, and a third not even putting away five percent, the problem isn’t that people are uneducated about retirement. It’s that people cannot save money when they’re putting all of their income into their kid’s child care, their own student debt, their health care, rent and mortgage payments, and basic necessities. It’s hard for people to save when they’re trying to make ends meet every day.
Some laws — like the Secure Act 2.0, which will make it easier for people to save for retirement — could help bolster savings and help people catch up easier for the end of their lives. But that’s just the beginning.