Whether retirement is decades away or just around the corner, you may be wondering how much money you’ll need and whether the amount you’ve saved is adequate. In fact, you’re not alone if you feel like you’re not on track to retire on good terms. According to Bankrate’s Retirement Savings Survey, more than half of Americans (56%) currently feel like they’re behind on saving for retirement.
Good news: No matter how old you are, there are things you can do now to grow your nest egg. We review some important retirement savings statistics from Bankrate’s research and offer tips for growing your retirement savings, whether you’re a seasoned saver or just starting out.
Key retirement savings statistics
- More than one in five adults (21%) say their biggest financial regret is not saving for early retirement. (Bankrate Financial Regret Survey)
- Among U.S. adults who don’t feel completely financially secure, 41% say their anxiety is due to a lack of retirement savings. (Bankrate Financial Freedom Survey)
- Among U.S. adults who say money is having a negative impact on their mental health, 39% say it’s because they’re not preparing for retirement. Additionally, 27 percent said it was a cause of increased concern over the past year. (Bankrate Money and Mental Health Survey)
- Almost two-thirds (62%) say being able to retire is part of the American Dream. (Bankrate Financial Security Survey)
- Among U.S. adults with children over the age of 18, 43% say they are sacrificing their retirement to support their adult children. (Bankrate Financial Independence Survey)
Are your savings on track for retirement?
According to Bankrate’s 2023 Retirement Savings Survey, 20% of working adults in the United States feel that they are somewhat behind in their retirement, and 37% feel that they are far behind in their retirement. The answer was yes. Of those who feel behind, 60% are baby boomers, 69% are Gen Xers, 49% are Millennials, and 42% are Gen Zers. A total of 56% feel they are behind on their retirement savings, which is largely unchanged from last year’s survey. 55% of them said they felt delayed.
Among all age groups, Gen Xers are the least likely to feel like they are on track to save for retirement, at just 14%. However, overall awareness of retirement is increasing year by year, with 16% of people saying they are unsure of where they will be in retirement in 2021, only 10% in 2022, and only 10% in 2023. In 2017, it was only 7%.
When it comes to how much people should save, Bankrate’s latest Retirement Savings Survey found that 32 percent of workers believe they need more than $1 million to retire comfortably. .
At the end of the day, there are steps people can take to foster a retirement life that aligns with their expectations, regardless of their age, even if they’re already retired.
For young workers and savers, the best option is to start as early as possible to maximize the power of compound interest. This could make him a huge six-figure difference in dollar terms over the long term. For others, it may be a bit of a Hail Mary pass to delay retirement and work longer, even if only part-time. One key is to maximize contributions to your 401(k) account and take advantage of catch-up provisions when available.
— Mark Hamrick | BANKRATE Senior Economic Analyst
retirement savings contributions
When asked how much more people are contributing to their retirement savings this year (2023) compared to last year (2022), the survey found:
- More than two-thirds (36%) are giving about the same amount as last year. However, 22% said it did not contribute to their retirement either last year or this year.
- Almost two-thirds (31 percent) of parents or guardians with children under 18 are contributing more to their retirement savings this year than last year, compared to parents or guardians with children 18 and older. That’s only 18%. In the middle, 24 percent contributed more than last year.
- Gen Z and Millennials are more likely to contribute more to their retirement savings from 2023 to 2022 than Gen X and Boomers.
Note: The results in the graph above varied over the years in terms of the groups surveyed and the questions asked. Those surveyed in 2020 and 2021 were asked, “How much more are you contributing to your retirement savings now compared to before the coronavirus outbreak?” In 2019, the study group included people employed full-time or part-time, but now includes those who are temporarily unemployed. These percentages are all about people who answered “more” when talking about how much they saved in the previous year or years.
How to read bank interest rates:
A quarter (25%) of people say they don’t know how much they need to save to retire comfortably. There’s no simple answer to how much you should save, but consider how long you need your retirement account, how long you have until retirement, and what investment returns you can expect.
“Retirement savings efforts need to coexist peacefully with other elements of a person’s financial goals, such as saving for emergencies and paying down debt,” says Bankrate’s Hamrick. “If you aim to live below your means while working and save for retirement, you have a better chance of maintaining that standard of living when the time comes to stop working. With limited savings later in life, you may be forced into a more frugal lifestyle, leaving you with few options.”
How to increase your savings for retirement
The latest statistics show that in 2022, the average household had a pre-tax income of $94,003 and expenses of $72,967. consumption expenditure survey According to the Bureau of Labor Statistics. Major expenses include housing, transportation, and food. More than three quarters (78%) of people’s income went towards living expenses.
Ways to increase your retirement savings each year include choosing to buy cheaper cars or more affordable homes, and changing your spending habits for everyday items like groceries and discretionary expenses like travel. included.
One measure that can significantly increase your savings over the long term is to make additional payments on your mortgage to reduce both principal and interest. Another way to end up saving thousands of dollars is to stop trading up and buying a bigger home. This will increase your mortgage bill and increase maintenance costs.
The amount you need for living expenses and how much you can save depends on factors such as your income and family size. However, no matter your situation, you’ll probably be able to find ways to cut costs to increase your savings rate.
“It’s important to have a plan, including your retirement savings goals,” says Hamrick. “By leveraging a wide range of tools and options, from online retirement calculators to in-person financial planning, you can increase both your confidence and your results.”
best savings account
The best savings account for you will depend on your individual needs and circumstances. Popular interest accounts include:
- high yield savings account
- The best high-yield savings accounts currently earn an annual percentage yield (APY) that exceeds the rate of inflation, making them a safe place to earn interest on your funds. Plus, these accounts allow you to access your money quickly and easily, making them perfect for emergency funds.
- Certificate of Deposit (CD)
- You may be able to find a CD that earns you a more competitive interest rate than a high-yield savings account, but CDs typically require you to lock up your money for a set period of time. CDs are a good option for funds that you don’t need to access until the expiration date of the CD term. Typically, if you access your funds before a CD matures, you will incur an early withdrawal penalty.
- money market account
- Money market accounts typically offer the best of both worlds, earning competitive yields while offering check-drawing capabilities and debit cards.
- Interest-bearing checking account
- Money market accounts typically have restrictions on drawing checks and using debit cards, while interest-bearing checking accounts typically have no restrictions on such transactions and earn a rate of return. However, keep in mind that most interest checking accounts have significantly lower yields than savings accounts, CDs, and money market accounts.
Retirement Savings Frequently Asked Questions
When it comes to Social Security, you can start collecting benefits at age 62, but if you wait until you reach retirement age, you’ll receive the full amount. The full retirement age for a person born after 1960 is 67 years old. The full retirement age for someone born between 1955 and 1959 is 66 years for her, and from 1954 onwards he adds 2 months for every 1 year for her. Also, the full retirement age for someone born between 1943 and 1954 is he 66 years old.
How much you should save for retirement depends on factors such as how long you expect to need your retirement savings, how long you have until retirement, and what investment returns you expect to receive. By getting a guaranteed return on your investment, you can significantly reduce the amount of principal you have to take out each year.
How long your retirement savings will last depends on how much money you’ve saved and the lifestyle you choose to live after you retire. The less money you spend on things like housing, transportation, food, and travel, the longer your retirement nest egg will last.
If your employer offers a 401(k) plan, sign up for this tax-advantaged account and contribute enough to take full advantage of any employer matches offered. Another tax-advantaged retirement account option is an Individual Retirement Account (IRA). This can be a good option for someone whose employer does not offer her a 401(k) account.
People who want to plan for their own retirement can access free tools like an online retirement calculator, and those who want some help can talk to a financial planner.