Americans are facing a retirement crisis, with less than half believing they are on track to retire comfortably. According to a recent poll, only 21% of respondents are very confident they will have enough money to live comfortably throughout retirement. BlackRock reports that one in four Americans has no retirement savings, and 45% will run out of money in retirement.
Inflation and market volatility are major obstacles to achieving retirement savings goals. A divide exists between confident and uncertain savers. Among Boomer and Gen X respondents, only 40% felt they were very likely to achieve their goals, while Millennials and Gen Z were somewhat more optimistic at 48% and 50%, respectively.
One way to navigate retirement planning is to use the annual income multiplier. This scale shows how much you should have saved for retirement based on your age. For example, a 35-year-old with an income of $100,000 should have between $100,000 to $200,000 set aside for retirement.
Starting early allows a saver to leverage time in the market. Compound interest will balloon the principal investment over time. Using tax-advantaged accounts like 401(k)s and maximizing employer matches is crucial.
Americans unsure about retirement savings
If you have delayed saving, do not panic; every dollar counts. Even if you have not saved anything by age 50, there is still time to catch up.
Consider target date funds that adjust to less risk and more bonds as you approach retirement. After 50, catch-up contributions allow you to allocate additional funds to your 401(k)s or 403(b)s. Economic pressures and rising housing costs are clouding the retirement prospects for over half the nation, with Gen X and baby boomers feeling the pinch more than younger generations.
As many as 57% of Americans believe they will not retire comfortably due to financial stresses such as inflation, high interest rates, or difficulties in the job market. Many people still have years to go before retirement, and while saving for that milestone is wise, many are struggling to save up enough for homeownership. The savings needed for a 20% down payment has increased by around $45,000 for homeowners nationwide when adjusted for inflation.
In Utah, the increase in the down payment needed from 1970 to 2024 is $78,179. Understanding your retirement savings target and taking a quantified approach with tools like the annual income multiplier can offer clear guidance. Early planning, disciplined saving, and using tax-advantaged accounts are key strategies to achieving a comfortable retirement.
However, for many Americans, navigating the financial landscape to secure a comfortable retirement remains a significant challenge amidst economic instability and rising living costs.
