Few tasks are as daunting as putting enough money away for retirement. According to a 2013 survey from the Employee Benefit Research Institute, working Americans are worried that their retirement savings simply won’t cut it.
A small minority of Americans – just 13% – are “very confident” about having enough money for a comfortable retirement. This statistic is significantly down from six years ago in 2007 when 27% of workers reported that they were “very confident” about their ability to retire comfortably. Today, just over a third (38%) consider themselves “somewhat confident” about having enough money. But the rest lack confidence. About a fifth are “not too confident” and 28% are “not at all confident” about having enough saved to live comfortably after retirement.
There are a number of factors that get in the way of saving for retirement. When money is tight, it’s easy to be more concerned about more immediate concerns such as job uncertainty and simply making ends meet for yourself and your family. Of those who do not contribute to their employer’s retirement plan, 41% say they can’t afford to do so because of to day-to-day living expenses like rent and utilities. Another 55% say that pre-existing debt interferes with retirement contributions.
As the saying goes, “knowledge is power,” but for whatever reason, only 46% of working Americans report that they or their spouse have tried to calculate how much money they will need to have saved by the time they retire. This means that nearly half of Americans have no idea what they’ll need to have tucked away in order to support themselves once they retire.
By not educating yourself on what you need for retirement, you’re essentially setting yourself up for failure. How can you save enough money when you don’t actually know how much you’ll need? Most experts recommend consulting a trained retirement advisor, but only 23% of Americans have actually done so. Luckily, there are also a number of free and affordable materials out there to arm yourself with retirement know-how. Here are a few resources available from the American Association of Retired Persons, a non-governmental, non-profit organization for people over 50 that focuses on education and benefits for its members.
Are you saving enough? When can you afford to retire? How long will your money last? This calculator from the American Association of Retired Persons helps working Americans get answers to these important questions. The application will ask you a series of questions about your age, income and savings in order to produce a graph with your projected savings. You’ll also be able to tweak your options to see how saving a higher percentage of income, adjusting your lifestyle, working longer or working part-time in retirement will affect the outcome.
If you cannot afford to discuss your retirement plans with a trained professional, AARP’s free online tools can help you understand the process. This web application will walk you through important steps such as setting goals, factoring in benefits, assessing your finances and pointing you toward additional resources including articles, quizzes and webinars.
Caught up in the financial jargon of retirement savings plans? Check out our retirement plan glossary to learn the differences between 401(k)s, 457s and Roth IRAs.