By Craig Erwin, Ph.D.
Thasunda Brown Duckett, president and CEO of TIAA, a firm that helps teachers save for retirement, warns that the US faces a financial storm, with 40% of retirees at risk of running out of money. She worries that inflation, the health of the US economy, the stock market sell-off, and rapidly rising interest rates will cause great pain for retirees.
The Motley Fool reports that only 55% of Americans who are not retired have either 401(k) or 403(b), retirement savings plans. They also found that 25% of non-retirees don’t have a retirement savings plan. Another worry; The Motley Fool found that the average amount in Americans’ retirement savings accounts is $65,000. How long will $65,000 last in retirement? Maybe a year, if you’re lucky.
The moral of this story is that many people need to save more for retirement. The good news is that most people are saving something for retirement. The bad news is that many don’t save nearly enough. And many in younger generations may be headed for a different kind of trouble. The National Institute on Retirement Security warns that 95% of millennials aren’t saving enough for retirement and two-thirds haven’t saved anything. Investopedia found something else troubling about millennials; 28% of them expect to use cryptocurrency to help fund their retirement. Clearly cryptocurrency has not proven itself a reliable way to build wealth or to get rich quickly (as many crypto buyers aim to do). Cryptocurrency also lacks the qualities that make stocks and bonds good choices for retirement savings plans.
So, what can you do to ensure you are not someone who has far too little (or nothing) saved for retirement? Start saving now in your employer’s plan, and for God’s sake, save at least enough to get your employer’s match. If you don’t have the luxury of an employer plan, open an Individual Retirement Account (IRA). But start now and save as much as you can. These methods have proven to be very effective ways to build enough wealth to retire comfortably, but only if you use them.
Are you confident that you are saving enough for retirement? Are there steps you can take to save more?
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