Almost half of U.S. workers, 48%, say they don’t earn enough income to save for retirement, according to a new survey from the Transamerica Center for Retirement Studies. The finding is pretty consistent across generational groups.
On the high end, 55% of Gen Z respondents say they don’t earn enough to save for retirement, according to the survey. Even 40% of Baby Boomers, the age group most confident in their ability to prep for the future, say they don’t earn enough money to do so.
Millennials and Gen Xers come in at 49% and 48%, respectively.
It feels pretty daunting that so many people don’t feel like they can put away money for their own future, but context is important, says Catherine Collinson, CEO and president of the Transamerica Institute, the parent foundation for the Center for Retirement Studies. Survey responses for the more than 10,000 participants were collected at the end of November 2020, she points out, as Covid infections and deaths were increasing dramatically and many Americans were struggling with business closures, layoffs, and other financial stresses.
While that may have been anxiety inducing, it also made people think very seriously about some difficult subjects, like saving. Overall, credit card debt has fallen during the pandemic, and the personal savings rate spiked each time Americans received a Covid stimulus check.
Half of Americans put the bulk of the third check, which topped out at $1,400 per person, towards paying it down debt, according to Census Bureau data, and almost a third of stimulus recipients used most of the money to pad their savings and investment accounts, compared to about a quarter of people in the previous two rounds.
“The pandemic has gotten people’s attention,” Collinson says. “It’s this major tool that has prompted people to look at their finances, and look at them more carefully than they may have been doing so before.”
The big question is, Collinson says, how will people who are now thinking about these topics keep that momentum going forward?
How to start saving: Remember, ‘something is better than nothing’
Experts recommend you put away 15% of your income for retirement, but that number can feel overwhelming for individuals who haven’t begun saving for retirement, or those who stopped saving during the pandemic, and who are starting anew, especially as the delta variant’s spread increases fears of more economic uncertainty.
It’s important to remember, however, that anything you put away for retirement now — even the smallest additions — helps. Thanks to the power of compounding, little bits can still grow to great amounts. You have other levers that can help you, too: You can often make pre-tax contributions, for example. An employer match can double your money. And there’s an extra tax break called the Retirement Savers Credit if you really don’t make much.
And starting small can lead to something big later on, says Stanzak. “Something is better than nothing,” shesays. “I applied that to my exercise regimen. And even if I only do 15 minutes, something is better than nothing. It’s the same thing with retirement planning: Something is better than nothing.”
Source: GROW
