1 in 5 Americans Doesn’t Expect To Retire Comfortably: How To Start Saving Now

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A comfortable retirement was once considered a milestone of American success. However, retirement appears increasingly out of reach for a significant portion of the population.

A recent GOBankingRates survey paints a troubling picture. According to the findings, 1 in 5 Americans harbor doubts about their ability to retire. Roughly 20% don’t think they can ever retire comfortably. What’s more, about 28% of respondents said they don’t have anything saved for retirement.  

This growing concern reflects broader economic challenges, from stagnant wages to rising living costs. However, you can still have a secure retirement. The path toward a solid retirement begins with strategic saving and smart financial planning. Here’s how to prepare for your golden years.

Understand Your Retirement Needs

Before diving into saving strategies, it’s important to grasp what a comfortable retirement means to you. This vision varies widely among individuals and is influenced by lifestyle expectations, health considerations, and personal goals.

A common benchmark suggests aiming for about 80% of your pre-retirement income to maintain a similar standard of living. Assessing your future needs involves calculating anticipated expenses such as housing, healthcare, and leisure activities. Tools like retirement calculators can offer a preliminary glimpse into how much you need to save to meet your objectives.

Start Early, Save Consistently

The power of compound interest cannot be overstated. Starting your savings journey early–even with small amounts–can significantly impact your retirement nest egg. Consistency is key.

Regular contributions to your retirement accounts, such as a 401(k) or an IRA, harness the growth potential of compounding, where earnings generate their own earnings over time. If you have delayed saving, it’s never too late to start. Prioritizing retirement savings and increasing contributions as your financial situation improves can help bridge the gap.

Maximize Employer Contributions

Many employers offer retirement savings plans, such as a 401(k), with some matching the contributions you make. Not taking full advantage of this match is like leaving free money on the table.

Contribute at least enough to capture the full match offered by your employer. Over the years, this can add up to a significant portion of your retirement savings, bolstered further by investment returns.

Diversify Your Investment Portfolio

Investing is a vital component of retirement planning, offering the potential to grow your savings at a rate that outpaces inflation. Diversification is a fundamental investing principle that involves spreading your investments across various asset classes, such as stocks, bonds, and real estate, to reduce risk. A well-diversified portfolio can weather market volatility, protecting against significant losses while capitalizing on growth opportunities across different sectors.

Establish an Emergency Fund

Unexpected expenses, such as medical emergencies or major home repairs, can derail your savings plan if you’re forced to prematurely withdraw from your retirement accounts. Typically, it’s advisable to have three to six months’ worth of living expenses in a readily accessible savings account. This buffer provides financial security and ensures that your retirement savings can remain invested and continue growing.

Seek Professional Advice

Navigating the complexities of retirement planning can be daunting. Professional financial advisors can provide personalized guidance. They can help you refine your retirement goals, assess your financial situation, and develop a tailored saving and investment strategy. They can also offer insights into tax-advantaged saving options and strategies for managing risk as you approach retirement.

Bottom Line

The prospect of not retiring comfortably is a concern for a significant segment of the American population. However, the dream of a secure and enjoyable retirement remains achievable with early and consistent saving, strategic investment, and informed planning.  

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

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