Why Working Longer to Save More Is a Bad Retirement Strategy

If your retirement plan mostly consists of working longer to earn and save more money, you might need to rethink that strategy. The 2015 Retirement Confidence Survey from the non-profit Employee Benefit Research Institute (EBRI) and Greenwald and Associates revealed that many people are unprepared for retirement because they left the workforce earlier than expected and aren’t saving enough money, reports USA Today.

Here are the startling results of the survey, as well as tips on how workers can get back on track with their retirement savings.

Workers Are Financially Unprepared for Retirement

The survey polled more than 1,000 workers and 1,000 retirees, and found that 28 percent of workers have less than $1,000 in savings and investments, not counting the value of their residence or defined benefits, like pension plans. Fifty-seven percent have less than $25,000.

Many of the retirees surveyed said they had planned on working later in life to save more, but unexpected events took them out of the workforce early. Of those surveyed, 60 percent stopped working due to health or disability issues, and 27 percent left the workforce because of changes within their companies.

Jack VanDerhei, co-author of the 2015 Retirement Confidence Survey and EBRI’s research director, told USA Today, “People keep saying, ‘I’m not saving so I’ll plan on retiring much later,’ but oftentimes for reasons they can’t control, people are not able to retire as late as they want.”

Still, 67 percent of the workers surveyed said they plan on working during their retirement years, even though only 23 percent of the retirees reported actually worked during these years.

Why Aren’t Workers Saving More Money?

The study found that people cited the high cost of living and day-to-day living expenses as the reasons why they aren’t saving more money for retirement. Of those surveyed, 69 percent said they could increase their savings rate by just $25 a week or more.

“That would make a huge difference in their retirement savings, especially for a young worker,” Lucas Vandermillen, vice president of retirement services for Principal Financial Group, told CNN Money.

Debt is another huge barrier keeping people from saving more for retirement. More than half of all workers and a third of retirees surveyed said they have issues managing their debt, which includes mortgages, credit cards and auto loans.

Read: 28 Mistakes Retirement Mistakes People Make

How Workers Can Better Prepare for Retirement

This is not the first time EBRI and other groups have conducted these studies. In fact, similar savings rates have been reported, according to USA Today.

VanDerhei says the decade’s worth of research from the EBRI shows that the biggest predictors of successful retirement planning is how many years workers participate in retirement plans, like 401(k)s, 403(b)s and pensions. The new study found that 44 percent of people who don’t have a retirement plan do not feel confident they have enough to get them through retirement, as compared with the 14 percent with a retirement plan who feel unprepared.

For workers to feel more prepared, Craig Brimhall, vice president of wealth strategies for Ameriprise Financial, told USA Today people should start living within their means before retirement — not just during. “Cutting back on extras like dining out, designer coffee and purchases you don’t need are easy ways to jump start a savings plan,” he said.

Vandermillen offered some tips to USA Today on how workers can be more financially prepared for retirement, including automatically calculating exactly how much is needed to save and setting up automatic contributions to a 401(k) or IRA. Although these calculations might seem “intimidating and time-consuming,” many tools can make the process easier, said Vandermillen.

He also told NBC News, “Amazingly, only 48 percent of workers surveyed said they’ve taken the time to calculate the amount they’ll need in retirement. Even a small contribution over the course of someone’s career, even with a moderate rate or return, can provide a significant difference in the amount that you have accumulated for retirement.”

But perhaps the biggest step workers can take right now to start saving more is to simply get started and have patience. “The earlier you can start saving, the better,” Brimhall told USA Today. “Allocating money for retirement can have the snowball effect — meaning it may not seem like much is happening at first, but as a result of compound interest, those savings will eventually build up to form a large base of cash.”

  • Recent Musician

    Many people live in the present without planning for the future. They are spending money keeping up with the Joneses, who are keeping up with the Smiths, who are keeping up with the Rothschilds, who alone can afford the high level of expenditures, (without borrowing or spending all they have , as the Joneses and Smiths are). If people planned their own lives within their means, spending what they can afford, saving what they need, ignoring the competition to look richer than they are, and taught their children the value of living within their means instead of joining the impossible competition, they could retire happily at what is regarded as a reasonable retirement age, early 60s or so, where you are still strong enough to travel, if you want to, energetic enough to go hiking, if you want to, or just laze in the sunshine, if that is your preference. It is our highly competitive society that keeps people from properly planning for their future without regard for the saving it requires.

    • markpkessinger

      And for many more people, it really isn’t a matter of “keeping up with the Joneses,” but is rather one of simply not making enough to be able to save after meeting basic expenses.

      • JoeOvercoat

        For the demographic reading this article, it is very likely that the case described by Recent Musician dominates the space.

    • Ike bartis

      Well said. You hit the nail on the head.

  • Randall

    Stated simply, inflation of prices over the past generation has occurred at roughly double that of wages (compared to, say. 1989). Thus, the middle-class worker with at least a Bachelor’s degree now earning $45,000 must now live basically with the standard of life in 1989 of the lower-class earner, earning slightly over minimum wage.

    • Amerman

      Government is a greedy, irresponsible, wasteful parasite…
      As Govt grows, since every penny Govt spends is sucked from the productive economy, Govt spending impoverishes us all…
      And Federal Govt power, intrusion, regulation, spending has grown a lot since 1989, with direct and indirect taxes and costs… so our standard of living drops.

      • gordy

        mine hasn’t but then again i don’t go out and buy a $300,000.00 sports car, or a $600,000.00 sail boat which i could do very easy and pay cash! nor do i live in a $2 million dollar home, which i could do very easy. the only vice i have is going camping in my modest pop up camper on the weekends at the lake and sit and fish! i retired at 47

        • Ike bartis

          I am impressed if you are telling the truth.

      • Michel Masson

        Oh bullshit, Amerman. Every penny that Government spends goes right back into the economy and stimulates it. Scapegoating Government is ridiculous. Re-read the article: your retirement is entirely up to you. My family lived for over 40 years solely on my single rather feeble teacher’s salary; we saved, invested and did everything the article suggests, and we are now living quite well in retirement. Just came back from 3 months in Europe, where we ate and drank like (minor) royalty, our 5th such vacation since retirement. (I retired at 66.)

        • Amerman

          Every penny that Government spends goes right back into the economy and stimulates it.

          === ==
          Really?… just like every penny a mugger takes goes right back into the economy… so you should advocate for that also…

          Govt TAKES BY FORCE from those who earn it, then wastes it and hands it to others who did not earn it… reducing the incentive to produce, earn… increasing incentive to be a parasite..
          Every penny Govt takes is unavailable for reinvestment, growth..

          So, if I create or investment in a business, if it fails, my money is gone.. if it succeeds, Govt takes half or more, constantly increasing, of whatever return I can get… so why bother, only a fool would take that bet…. so much easier to lay back and do nothing, go on the dole.

          • Michel Masson

            Gee, Amerman, how’s that paranoid blame-the-government working for you? Are you having a great life? Me, I did everything the article suggested, my life turned out great, I love Obama, and I’m grinning from ear-to-ear every day. I win!

          • Amerman

            Sure, you lived your life feeding at the public trough….
            What do you care that Obama Dems have run up $10 trillion new bankrupting Democrat deficit stolen from and crippling you children’s future… or that Govt took the money for your career and retirement from other Americans who would have preferred the choice of private schools…. now you are kicking back on a bankrupt Social Security system provided by pandering, irresponsible big govt….
            The liberal mantra: enjoy it while the checks still cash…

          • Michel Masson

            Like I say: I’m happy with it, totally happy. I win!

          • Michel Masson

            Oh, and I’m having a cold one right now, thinking happily of Obama, the best damn President in at least 6 years, maybe longer. And looking forward to Hillary!

          • KStar

            Have you ever noticed, those who accuse are so often guilty of that very thing? They yell at others for that which they can’t stop from doing! I suppose if you wear poop-colored glasses, the whole world seems stinky and dirty.

          • Dooby Loufie

            You’re also clearly smoking a doobie

          • Amerman

            I’m happy with it, totally happy. I win!


            I know that If liberals had character, integrity, honor, judgement… then they
            wouldn’t, couldn’t be liberals..

            But the extent of your irresponsible greed, lack of sorrow over the crippling bankrupting Democrat debt Obama Dem greed has laid on our poor children is truly shocking…
            I hope it is more ignorance than the obvious immoral decadence, but I think not.

          • Michel Masson

            Liberals care about other people, and work hard to help them, hardly an “amoral” position. Conservatives like you are bitter, selfish assholes, no good to society or to themselves. I’m proud to have been a lifelong teacher, and to have at least tried to pass on my principles to “impressionable children”. You, Amerman, are quite beyond hope. Why even argue with you? As someone once said, “It is hard to win an argument with an intelligent person, but Impossible to win one with a stupid person.”

          • Amerman

            Liberals care about other people, and work hard to help them

            ==== ==
            Some examples of liberal ‘caring’ and ‘help’…
            Barack Hussein Obama ‘cared’ about Libyans, so he bombed/strafed them without Congressional or UN authorization, murdering over 100,000 men/women/children in violation of our Constitution, War Powers Act, and UN law… all to destroy a stable, secure, secular Govt and instill Obama armed/trained/funded jihadists in power to murder and oppress the people… jihadists who later formed ISIS… Thanks Obama

            By the end of the Eisenhower administration, blacks approached whites in rates of poverty rate, unemployment, crime, dropouts with strong families… liberals ‘cared’ and ‘helped’ with 5 decades of ‘Great Society’ liberal programs/policies… now blacks have rates of unemployment, poverty, drug use, welfare, dropouts, crime and broken families about EIGHT TIMES WHITES… thanks liberals…

          • Michel Masson

            Republicans have given us far more grief. We will never agree, so lets end this. I’m out.

          • Dooby Loufie

            Thank God

          • Amerman

            at least tried to pass on my principles to “impressionable children”.

            === ==
            Too bad for you you’re not dealing with naive, uninformed, gullible children now..
            In our debate, you have presented not an iota of facts…. nor even tried to refuted mine.. not added an cogent analysis, logic, or research…
            you have just indulged in the stereotype liberal bile, insults, personal attacks..
            Shame on you.

          • Emma Peel

            another one born every minute.

          • Emma Peel

            it’s very evident you do love king zero. like a good commycrat should.

          • Dooby Loufie

            No – you’re a loser like everyone else who voted for Obama. If you think you’re a winner it’s because you’re on the take. Get a life

        • Emma Peel

          you, michel masson, cannot possibly be that stupid.

          • AFairTexan

            Emma dear. Time to get real. The trillion dollar depth is all on acoustic of the funny money that your ReThug friends had to print to help pay for the cost of the wars they got into, because YOU WANTED YOUR FREEDOM TO BE PROTECTED. Those RePub bimbos that you put in place in DC, laughed their way to the bank and left you holding the bag and making this an UNSAFE WORLD TO LIVE IN. My Prez Obama has been trying to do his darndest to keep the world at peace. People like you and that moron Amerman are hell bent to make certain that the war mongering and the deep financial pit you are digging will continue. Get real old lady.

          • Gary Summersell

            Yes she can.

      • yuyjbvk


      • Ike bartis

        People are greedy also, Governor. The buck stops with the individual. We get in trouble financially because of bad choices.

        • Amerman

          In the past few years liberal Democrats have run up $12 trillion new bankrupting Democrat deficit, impoverishing us all and our children…. electing Dems was a very bad choice resulting in devastating financial trouble.
          Greedy, parasitic big govt dwarfs all other ‘bad choices’… takes everything it can and returns very little…. WITHOUT INDIVIDUAL CHOICE.

          • dahlimama

            When Bush left office we were locked in a war we could not hope to win,had run up a bill of trillions, had a major depression worse than the great depression and had wiped out the surplus that Clinton had left. I don’t know how old you are kiddo but I fully remember when Ronnie reagan”s voo doo economics lead us into a severe downturn (trickle down economics my arse!)You are a complete tool if you do not realize that the money that is spent and not counted is where the problem is. It’s not with the postman that delivers your mail or the guy that cleans up after you at the local park or the woman that calculates your taxes, it’s the black box projects you never get to see and that they can call classified! How much did it cost you to build all those black box prisons in eastern Europe, or the trillions to set up a surveillance network to capture every single email,phone call and text in the world or the weapons systems we are kept in the dark about. How about how much we paid all those private companies like Black Water to run our illegal invasion of another country.Don’t even think about blaming a president for those because he does not have access to that information either! The CIA and others like them do not answer to you, me or the president and how much they spend of our money we’ll not be told because it’s classified. so enough of you mouth! Go read a history book or newspaper or talk to someone over 65.

          • Amerman

            1) The American Congress voted to establish example secular democracies in Afghanistan and Iraq.. GWB carried out his duty as POTUS under Congress’s directives, and we WON THOSE WARS… we established functional democracies…
            Barack Hussein Obama abandoned and betrayed those hard won Democracies and people, handed them to Islamic jihad… Then Obama unilaterally, illegally, unprovoked, unnecessarily attacked Libya and MURDERED OVER 100,000 Libyan men/women/children.. in DIRECT CRIMINAL VIOLATION of the US Constitution War Powers Act and UN law.. all to hand Libya to Obama armed/trained/funded Islamic jihadists who later formed ISIS…
            Obama is a mass murdering war criminal deserving of impeachment and trial/conviction in international courts..

            In Jan 2007, the Pelosi/Reid/Obama/Hillary Democrat Congress inherited 4.4% unemployment, 52 straight quarters of economic growth, a record high DOW, and a low/dropping deficit… it took Dems ONE YEAR to destroy our economy, bring this miserable Democrat ‘Great Recession’… Obama threw gas on the Democrat fire, while Obama Democrats ADDED $12 trillion more bankrupting Democrat deficits WASTED on Democrat kickbacks, payoffs, pork…
            the Republican Congress and now Senate have slowed the Democrat train of corruption, incompetence, deficits, waste… but a return to Republican prosperity and fiscal responsibility must await a 2016 Republican POTUS..

          • Dooby Loufie

            Really – WTF dude. The surplus you claim magically appering during Clinton BJ years was totally due to the giant tech run up. Get a life and stop sucking the govnt. teets.

    • 946towguy

      I have an AS which was relative to but not required for my previous profession. I started my own business in a field that requires no degree. I now make more than I ever have, while enjoying the freedom of being my own boss.

  • The_Mick

    I know many people who claim they can’t save more for retirement who buy a $35K car when a $20K car will do and get a new car every 3 to 5 years. My 2013 new car, an $18K total Honda Fit base automatic (Consumer Report’s best bang-for-the-buck car 4 years running), replaced the new car I bought in 1997.
    I also had automatic savings (retirement and otherwise) going into Mutual Funds, stock DRIPs, and things like I-Series Savings Bonds. I’d ratchet up the amount until “it hurt,” then look for other ways of enjoying life yet getting the most for my money while setting aside a little more.
    I retired comfortably at 56.

    • Doug Smith

      I agree …always had a good truck not new…got debt free…invested 40℅ of income for three years so could see if could live on pension… Retired at 58….article never says outright just have to live within your means or below it…

  • gordy

    ya, stick your money into a 401k or an IRA and when you get old enough to draw on em, you will be taxed at the earned income rate which is 35%, plus if something happens and you have to take out money early it’s 45%, also you have no control over the investment, so if the investment goes bad, you are stuck riding it down, plus the government can come in and take your money and fill the account with worthless bank stocks and bonds. i put my money into real estate, i bought house cheap with cash (no leveraging) and then sold the houses on 15 year mortgages (no taxes or maint. to pay out), also i bought gold and silver and i mean a lot! when i bought gold the spot was $212.00 an oz. i bought 850oz. and sold most of them when gold was at about $1800.00 an oz. i still have 50oz of gold 1500oz silver. and that is not counting the stocks i owned throughout the years that paid good dividends. plus since i am disabled i get 100% percent va and ssa disability which nets me just over $4,000.00 a month, and i don’t consider my self overly bright, i just took what worked and let all the hype go in one ear and out the other. if you want true wealth, than go see what the truly wealthy are doing.

    • Gary Summersell

      The earned income rate is not 35%. And if you take it out early it is not 45%. And you have control over which funds you invest your money in. Good for you making a little money in gold and being on disability. However, everything you said before that was not accurate.

    • IDontThinkSo2

      Nothing you said about 401k or IRA is correct.

  • Hoss Hoss

    Saving shouldn’t hurt, it should happen naturally in the course of your life, of course that means you have an innate sense of living within your income, which means you are able to realistically assess your situation, understand your mortality, know that the future is coming. Just knowing if you’re needlessly, wastefully,in debt, paying interest, have other bad habits, your money is filling someone else’s pocket, not yours, can help a person come to his senses, you don’t have to live ascetic or like a monk, but some common sense helps, sure anyone can find themselves in a bad place, but to realize it was their own fault, that’s a big step right there.

    • Hoss Hoss

      it used to be you could count on compound interest to grow your savings, but the last 8 years have shown that will not always be the case, so what to do, you still need to have the money when you need it so, take it from there and do what you have to do, do what you can.

  • Vicky Woodard

    I love the comment about the effects of compound interest. Anyone getting even $100 interest per year? Didn’t think so.

  • The_Mick

    Working longer is not what’s bad, PLANNING to work longer is bad when you’re younger and have no clue if you’ll be able to do it.

  • Siouxlouie

    The money deposited early in a tax-deferred plan is the best. Just keep saving and saving. In my last 10 years of employment, I had my pay checks deposited directly into my advisory account and let my wife withdraw what she needed to fund our household expenses, with two results: (1) we saved a lot more than we would have had she had access to the money before it went to the advisor, and (2) the withdrawals established a baseline budget. I have retired now and we have much more money than we’ll ever need (assuming we don’t start buying Picassos and the like).

  • Ike bartis

    I am amazed that all of these financial experts on here fail to mention the most important thing about saving for retirement. Giving first to the Lord on your earnings. Tithe 10% of your gross earnings before putting anything into retirement plans, 401k, mutual funds, annuities etc. Then see how the Lord will help you manage the remaining 90%. It will never fail if you do it right, just don’t be greedy and overspend and don’t be so self absorbed. If you just save 10% of that 90% over time, you will be amazed.

  • garysund12@yahoo.com

    There is no doubt that most younger people spend like there is no tomorrow. Expensive clothes, cars, vacations, you name it. Why save when you are young? You still have plenty of time. So you think. Thank goodness I listened to my wise father, who is almost 92 today. He got me saving when I was a teenager and even got me started by buying me a few shares of stock. He got me started with 100 shares of Disney stock back in 1966 when I was just 14 years old. I added a few shares now and then plus with all of the stock splits and dividends I reinvested I now have over 8000 shares. Never sold even one. With that investment and what I have saved in my 401k, which was about 10% of my income which I started 30 years ago, I am set for retirement with well over 2 million dollars. The thing is you need to start young and keep on going. It did not take away from my lifestyle at all. Thanks dad, I owe it all to you.

  • fourdogmama

    The article contains good, but not new, ideas for saving more retirement money. It does not address how to cope with extraordinary expenses such as house or car repairs not covered by insurance. And the title is very misleading. Wasn’t worth my time.