Are You Saving Enough For Retirement?
Many Americans are not saving for retirement, and if they are, they're not saving enough, according to a recent survey.
Nevin Adams, co-director at the Washington, D.C.-based Employee Benefit Research Institute's Center for Research on Retirement Income, says about two-thirds of Americans are saving but they may not have enough when it comes to their retirement years.
"We have estimated that about 53 percent of Americans will have enough, will not run short in retirement, but 47 percent will run short of money in retirement," Adams said.
Adams helps to oversee EBRI's annual Retirement Confidence Survey, a fixture for 24 years.
The 2014 survey found that just 18 percent of Americans are very confident in their ability to afford a comfortable retirement, 37 percent are somewhat confident, and 24 percent are not at all confident.
Fifty three percent of workers say cost of living and day-to-day expenses are major reasons for not saving or not saving more.
Existing debt is also an obstacle. Adams noted that our culture's focus on spending and instant gratification also gets in the way.
"We are absolutely encouraged to spend rather than save. There are encouragements in the tax code. There are encouragements on the TV every night," he said.
Some believe our lack of saving has the United States headed toward a "retirement crisis."
Adams doesn't go that far but notes individuals who don't save end up costing society.
"At some level, many of them, as they are today, will be dependent on some of the government social safety nets, whether it's social security, Medicare, Medicaid-those kinds of programs. Those programs have costs," he said.
Choose to Save
Financial advisor Robin Tull, founder of Tull Financial Group in Chesapeake, Virginia, said many people lack an overall plan.
"People spend more time planning their next vacation than they do retirement," Tull noted.
Adams believes that many fear that they'll need a huge, unattainable amount for retirement and so never find out just how much they'll need.
"I think they're afraid to know what the answer is. The reality is, for a lot of people, the answer is probably not as bad as you think it is," Adams said.
"I come back with the question and say, 'You tell me how long you plan to live and what your monthly expenses are' and pretty much it can be calculated out," Tull said.
EBRI developed the program to help Americans determine how much they need for retirement.
Choose To Save offers a quick retirement calculator tool, the "ballpark estimate," that helps people determine a specific savings plan.
Building the Nest Egg
Married couple Amanda and Eddie Grizzard are two people who started saving early. They saved individually before marriage and began as a couple the month they married.
The Grizzards used a financial planner to determine how much they needed for retirement.
Amanda said she was inspired by friends and The 700 Club.
"I really learned a lot from being around different people. Even Pat on his show said, 'If you'll start saving this amount of money, 25 years from now you'll have a nice little nest egg,'" she said.
The Grizzards save a pre-determined amount every month that is automatically deducted from their paychecks. They add to it when there's overtime pay and they live frugally.
"She teases me because I take my lunch to work," Eddie said. "I still brown bag it every day."
The Grizzards have also kept saving even during bad times. Experts say holding off saving when the markets are down is a common retirement saving mistake.
Tull said many people developed that mindset during the recent recession.
"I think people have been hesitant investing, saving because they said, 'Hey I built this money up and then I lost it.' But you look and say, since March 2009 the stock market has gone up over 200 percent," he explained.
Another common mistake for many is overestimating how long they'll work.
"The survey has shown very consistently over its 24 year history that workers consistently think they're going to work longer than retirees tell us they were actually able to work," Adams said.
Here's some basic retirement savings tips:
- Plan on living longer than you think you might as life spans continue to grow.
- Save extra for healthcare because those costs going forward are difficult to estimate.
- Maximize your employer's 401K match and look into a Roth retirement account.
- Know why you are saving. Paint a picture of your retirement. It will sharpen your focus and motivation.
Leave an Inheritance
For Julia and Chris Williams, investing is part of living a godly life and saving as they start their family brings them peace.
"The one thing we've always said is we will always be good stewards of what God's given us and we will always maintain that money in a way that would be glorifying, i.e., not living outside our means," Chris explained.
"For me it's energizing to know that we have so much time. It's so far in the future that it gives us a lot of time to add to our savings. So, for me, that's encouragement," Julia said.
In fact, the Williams are thinking beyond retirement. They're following Proverbs 13:22 which says, "A good man leaves an inheritance to his children's children."
That means not only planning for their retirement and for their son Anderson, but for his children as well.