You might have heard that many American workers are woefully unprepared for retirement. According to a 2014 study by the Employee Benefit Research Institute, 36 percent of us have saved only about 1,000 dollars for retirement! That means a full third of the workforce has neglected to plan for their own futures.
Yes, that’s scary, but the study also uncovered some goods news: 18 percent of workers say that they are feeling “very confident” about retirement. That’s good news, but those who feel very confident about their futures have more to offer than a simple answer to a survey. As researchers continued to question this group of people, they uncovered some lessons that can potentially help all of us.
Confident Savers know what they need. Those who reported high levels of confidence also reported that they set a savings goal. In fact, 44 percent of these people said they used a retirement calculator to arrive at a target savings amount for their retirement accounts.
Confident Savers have retirement accounts. Researchers inquired whether study participants have opened a retirement account, and found that 90 percent of workers with a retirement account are also contributing to it. By contrast, only 20 percent of workers without a designated retirement account have managed to save for the future. What this tells us is that intent is a powerful factor. Just by opening a retirement account, you are more likely to follow through on the intention to save for a future. If you haven’t yet opened an account, get started today.
Confident Savers earn a higher income, and they’re also better with money. It’s probably no surprise that those who earn a higher income have an easier time saving for retirement. Workers with an annual income above $75,000 are more likely to report feeling confident about retirement.
However, that does not mean that all workers with a high income have also saved a significant amount of money for retirement. It appears that making money is only part of the equation; knowing how to manage it well is also important. According to the study, 32 percent of those with less than $1,000 of retirement savings actually earn more than $35,000 annually. These people could probably afford to save more for retirement, but they have yet to set a budget and make saving a priority.
If you fall into that last group, you know what you need to do next: Let’s put a retirement plan into place. Give us a call, and we can help you identify strategies to get your retirement savings plan on the right track.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.