We all have the hope and desire of one day retiring during our golden years and sitting by the beach. We’ve worked really hard to get to enjoy this time, but sadly, Americans aren’t able to save enough money. They make decent estimations, according to Catherine Golladay. She’s the COO of Schwab Retirement Plan Services.
They did a survey of 1,000 people of working aged adults. They guessed close to the right amount they’ll need to retire on. That number is around $1.7 million. The rest of the survey also found that Americans are vastly under prepared. 51% of those surveyed are contributing less than 10% of their salary, adding about $8,800 per year to their 401(k).
-55% said they just found a number they were good with.
-36% said they were matching their employer’s contributions.
-8% go with the default amount that was set when they enrolled.
While a lot of Americans are at least trying to save, they find a lot of obstacles are getting in their way. Debt is a large part of why they’re not able to save. Whether it’s spending the next decade paying off student loan debt or other monthly bills and credit cards. It can be difficult to balance debt, saving, and monthly payments, especially when the economy is turbulent.
Many Problems With this Thinking
After looking at the survey results, it’s easy to spot two different misconceptions Americans have about retirement. The first is that they see themselves as savers, when in reality, they’re investors. You’re investing into your 401(k) to get the most of out of it. Just ‘saving money’ won’t get you to your retirement goals.
The second thing Americans seem to push off is getting the advice they need to ensure they have enough to retire on. They’re just making guesses and going with the flow. They have no idea, in general, if they’re on track to reach their goals. And in a lot of cases, they aren’t making it. Considering we’re living longer, that plays a part as well.
Nearly every person involved in the survey said they would feel much more confident is they had the advice of a financial planner, but about half said they don’t feel their financial situation is bad enough where they should spend the money to get advice. It will end up costing them in the end of they don’t know where they’re headed financially.
“They may think their situation is simple, but your wealth is your wealth,” Golladay said. “Put yourself in the best possible position and take advantage of the help out there. It could help Americans to think of themselves as investors, not just savers,” she said. The problem is, investing is an art and it can be intimidating.
“But people — especially younger ones — tend to find the act of investing intimidating, and don’t consider themselves investors even when they have an employer-sponsored retirement account. Shifting the mind-set from saving to investing can help make a person feel more in control,” said Erin Lowry, author of “Broke Millennial Takes on Investing.”