I’ve recently come across an article published by Anytime Estimate, a company that provides tools and calculators for people interested in buying and selling real estate. The company polled over 1000 non-retired Americans to gather data on retirement savings statistics among various age demographics

As a family financial planner, I wasn’t completely shocked by the findings. Still, the numbers clearly indicate that many working Americans do not understand what retirement planning is and what strategies may work best for their particular circumstances.

I wanted to take a moment and review some of the more poignant findings from the poll and provide some of my perspective/insight on how working Americans can start making simple adjustments today to create the ideal retirement for themselves and their families down the road. 

• Not All Boomers Have Saved As Much As One Might Think.

Nearly 23% of the “boomers” surveyed said they didn’t start saving for retirement until they reached their 50s. The millennials surveyed seem better poised for retirement; 29% said they started saving for retirement between the ages of 25-29, while only 14% of baby boomers said they began saving for retirement in that age range.

What does this suggest? While often considered less financially focused, millennials are accustomed to higher living costs and are told from a very young age how important financial planning is. Millennials often look to take advantage of savings/investment opportunities provided by employers to help them meet life goals like buying a home or retiring, see the article “Retirement Savings and the Millennial Generation.” Baby boomers had the fortune of a strong middle-class job market and relatively affordable real estate market, so financial planning didn’t seem like a must-do for some boomers. 

• Many Americans Dipped into Their Retirement Savings During the Pandemic 

Of the respondents to the question, 62% of non-retired Americans said they had dipped into their retirement savings to make ends meet during the most challenging times of the pandemic. While it’s hard to draw dramatic conclusions based on data, it shows Americans’ financial preparedness for unforeseen events is not something to be showcased. Most people wouldn’t dream that a global pandemic would happen in their lifetime. Still, an ideal savings strategy would not lead to dipping into retirement savings, no matter how turbulent the market becomes. I also believe that amongst many Americans, there’s a tendency to underestimate how living costs exponentially increase over time – retirement savings may seem plentiful in one decade but not in the next.

• Not Earning Enough Is the #1 Reason for Not Contributing More to Savings Accounts. 

Among the 368 non-retired Americans who said they were not saving for retirement, 37% said they don’t make enough money to set aside for retirement. Financial planners hear this type of sentiment quite often. I often explain to my clients that this is not the case, but a clearer perspective is needed, and with a holistic view, saving for retirement is possible. It’s not about how much money you make; it’s about what you do with it. 

It’s Not About How Much You Make

I contend that it is not how much you make but how much you save. I have had people come to me making $300k annually and not saving anything, while others with a teacher’s salary put away 15% of their paychecks. 

The important thing is to start the habits of saving at an early age. Small contributions can make a big difference in the long run, even if it is just $25 per month for college or the minimum needed to get the company match in a 401k. As you age and make more money, up it from $25 to $50 a month, up the 401k from 4% to 5% – it all makes a difference. 

As important as asset allocation is asset location. Once you take care of the basics (cash reserve + 401k match), you must carefully consider your goals and where you are saving. Will the funds be available when you need them? What are the taxes and penalties?

There’s Always a Different Path to Take

While these metrics may seem discouraging to some, know that I’ve heard it all before. So many fears and anxieties regarding retirement and financial planning can be cleared up with the guidance of a professional. Setting the course, building foundations, and not overcorrecting when times get tough are the strategies I use with my clients to help them pursue their retirement goals. 

Click the link to set up a call, and we can discuss how retirement is something you CAN achieve with the right guidance.