Not Saving For Retirement? Now’s the Time to Start

Piggy bankIn the U.S., more than 10,000 people reach the retirement age of 65 each day. The average millennial actually thinks retirement should happen slightly sooner, at age 60 or 61. But while not having to work anymore may sound sublime, the reality is that most people (both young and old) aren’t doing nearly enough to financially prepare for retirement. So if that sounds familiar, you’ll probably want to start saving now.

Recent research from Bankrate and Charles Schwab revealed that millennials expect to retire early, but Fidelity found that this same demographic contributed only 7.3% of their paychecks to 401(k) accounts. With employer matching factored in, millennials put only 11.3% of their pay toward retirement this year. While that’s more than this age group was saving five years ago, that only accounts for millennials who had 401(k)s established; around two-thirds of this generation have no savings for the future whatsoever.

It’s not just millennials, though. Northwestern Mutual’s 2018 Planning and Progress Study found that 21% of Americans of all ages surveyed have nothing saved for the future, and another 10% have only $5,000 saved for a rainy day. Not surprisingly, 78% of Americans said they’re somewhat or extremely concerned about not having enough saved for retirement.

While millennials have been known to do some crazy things to make money for retirement, it gets harder to financially plan when you have fewer working years ahead of you. If you’re in your 40s with no retirement savings, you may want to consider downsizing in order to free up money from your regular expenses. The U.S. construction market was worth $1,162 billion in 2016, so if you can move to a smaller place instead of spending money on a custom build, you can earmark potentially thousands of dollars for the future. And people of all ages are embracing the side hustle, which can allow you to bring in extra income by devising a side business or renting out a room in your home. Of course, you may have no choice but to defer your retirement plans and simply keep working for a bit longer than you intended. Retiring by age 60 certainly has appeal, but it may not be financially feasible for your family.

If you want to assess whether you’re on track in terms of your retirement savings, Fidelity has a good rule of thumb for you to follow. By age 30, you should have the equivalent of your starting salary saved. By age 35, that number should be doubled. Every five years, you should increase this number, until you ideally have eight times your salary saved by age 60. Another good way to go is to save anywhere from 10-20% of your salary every year for retirement purposes.

If you don’t yet have that much saved up, you may not need to panic — but you do need to take it seriously and take action. Finding out about your employer’s 401(k) program (if it exists) may allow you to save, especially if your employer will match your contribution. You’ll also need to create a detailed budget and assess your current expenses to learn where you can cut back and how you can squirrel some dough away.

While retirement may seem like a long way off, it’ll sneak up on you before you know it — and your expenses will likely be greater than you ever imagined. So if you have nothing saved, there’s no better time to start than right now.

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