60% of Americans Aren’t Saving Enough for Retirement

What’s your target retirement date? For
many people, the answer may be “I don’t have one.” Saving money for retirement
is something we all know we should be doing. But like so many other things in
life, it’s easier said than done.

According to a recent survey conducted by Freedom Debt Relief, 60% of American households are saving less than $1,000 per year for retirement. What’s even more shocking is that 41% of households say they aren’t saving any money at all.

It’s not that Americans don’t want to save
for retirement—they just can’t. According to the survey, 32% of Americans say
that everyday expenses are the biggest barrier they face when trying to
increase their savings. 17% said that their debt was getting in the way of
their savings.

With so little being saved each year, retirement may just be a distant dream for most. In fact, 45% of people surveyed were so detached from their retirements saving goals that they didn’t even check their pay roll stub last month to see their progress.

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So how much should you be saving to make sure you hit your target retirement date? What tools and resources should you use to make sure you’re doing it right? We asked retirement expert Barbara Friedberg these questions and more. Here’s what she had to say:

So, how much should you save for retirement?

Many factors go into saving for retirement including your age, cost
of living, and additional income sources. 

If possible, it’s best to save 15% of your income for retirement. If
that doesn’t work for you, try 10%, or even 5%. Any amount of saving for
retirement is better than not saving! If you want a simple set of retirement
saving guidelines, Fidelity has a recommendation. 

A simple retirement saving calculation is to estimate your annual living expenses. Then subtract the income you’ll receive from Social Security. The difference is the amount of money you’ll need each year from your own savings. 

A retirement
calculator is helpful to figure out the amount you’ll need to save. 

Here’s an example:

Common wisdom suggests you can withdraw 4% from your savings in
retirement. So, if you need $30,000 to supplement Social Security, and you
start retirement with $500,000, earn 6% annually from your retirement
investments and withdraw $30,000 per year you’ll have $250,000 remaining for
your heirs in 30 years. 

When should you start saving?

Now. Time is the most important factor in building wealth for

Consider your money like a snowball at the top of a hill. And the
investment income is the snow that builds as the ball rolls down the hill.

The longer the snowball rolls, the bigger it gets.

The same is true of your retirement savings.

Start saving and $5,000 per year age 25 and earn 7% return on
your investment. At age 65 your retirement account is worth $1.068

Wait until you’re 45 to begin and you’ll need to save over $22,000
per year to end up with $1 million at age 65 (assumes a 7% rate of return).

What tools should you use to make sure you’re on track?

There are so many great apps and assists to help with retirement
savings today.

Here are a few of my favorites. 

Capital has a terrific retirement calculator and a 360 degree view of your
money. OnTrajectory is
another great retirement planning tool. 

apps are low cost ways to invest for the future that take the stress out of
managing your investments on your own.

In order to be a good steward of your money, you must keep track of
what you have and what you spend. You can use the free Mint.com
for a basic budgeting and saving app.

If you have home equity but no retirement savings, should you be worried?

It’s not helpful to worry about the woulda coulda shouldas. 

What’s most important is to start today and put as much as you can
into your workplace 401(k), Roth IRA, Traditional IRA, or an investment
brokerage account.

What are your tips for people who are just starting to save for retirement?

Start now.

Automate your retirement saving. That means have a portion of your
income withdrawn from you paycheck to go directly into a 401(k) and/or
retirement account. 

Take a risk quiz to find out how much to invest in stocks vs

Continue to invest during the market ups and downs.

Increase retirement investing with each pay raise. 
The post 60% of Americans Aren’t Saving Enough for Retirement appeared first on Freedom Debt Relief.

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