The economic collapse of a few years ago wiped out bank accounts, investment vehicles and retirement savings for millions of households across the United States and elsewhere around the world. Despite the so-called economic recovery, many still haven’t recuperated these losses.
According to a new survey by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates, only two-thirds of American workers, or their spouse, have set aside money for their retirement. This is down from the 75 percent number in 2009. Overall, 22 percent of full-time workers haven’t saved for retirement.
In total, more than half (57 percent) of workers report that the value of their household savings and investments is less than $25,000. Moreover, more than one-quarter (28 percent) say it’s less than $1,000.
More than two-thirds (69 percent) state that they are earning enough money to put away $25 a week more than they are now, which includes 55 percent of those who haven’t saved anything for their retirement. In other words, people can afford to save but they choose not to.
Why aren’t Americans saving more for retirement? About half of workers cite the rising cost of living and daily expenses as the primary reasons why they’re deferring their tax strategies.
Unsure how to start saving for retirement, even if you’re just 25? Here are five simple tips to increase your retirement savings by just a couple of hundred dollars a year:
- Pay yourself first every single time you receive a paycheck, rebate or refund.
- Cut back on non-essential items, like expensive data plans and cable packages.
- Pay off your debt; the amount of interest you pay could go towards your retirement.
- Declutter your lifestyle by selling stuff you never use or you don’t want anymore.
- Set savings goals with different savings or investment accounts.
The key is to start saving/investing early in life and be consistent (save with every paycheck). Taking advantage of a matching 401k plan should be a no brainer. The power of compounding is lost on many people. Also maxing out contributions when possible, eliminating debt, avoiding risks with your nest egg, planning for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.) and making catch up contributions once you reach 50 should all be part of everyone’s plan. And work at staying healthy to reduce illness, injuries and medical costs. The site Retirement And Good Living provides information on all these issues as well as many other retirement topics and also has several retirement and health calculators.