Most Americans Ashamed of Their Retirement Savings

[Computer 10,980]

The Typical American Is Embarrassed by Their Retirement Savings. Should You Be, Too?

Brian Stoffel - June 29, 2015

Embarrassed by your retirement savings? Get over it and start focusing on what you can do about it. 

We all have things we'd rather not share with the world -- private things that, whether they should or not, make us feel a bit embarrassed. For example, you might not want to share your personal emails or your Internet browsing history with everyone you know.

However, a recent survey by Merrill Edge found that Americans are much more embarrassed by something else: their finances. This is particularly true of millennials: 50% of respondents in that age group said they would be ashamed if others knew how they saved and spent their money.

The factors included one's credit score, monthly discretionary spending, and even total wedding costs. But the one thing people were the most embarrassed about in their financial life was their retirement savings.

Should you be embarrassed?
In short, you shouldn't be ashamed of your financial situation -- at least not to the point of paralysis.

Part of our problem as Americans is that we simply don't discuss finances; for some reason, the subject is taboo. That needs to change. Fight any embarrassment you may feel, make an honest assessment of your circumstances and your goals, and figure out how to get on track.

Where do you stand?
There is no one-size-fits-all standard for retirement savings, and for every guideline there are dozens of exceptions. That said, Fidelity has produced one helpful and extremely basic rule of thumb that may help you set a target.

Based on a number of assumptions (more on that below), here's how much you should aim to have saved for retirement at different ages if you want to retire comfortably.

Age Amount Saved
25 $0
30 1/2 annual salary
35 1 x annual salary
40 2 x annual salary
45 3 x annual salary
50 4 x annual salary
55 5 x annual salary
60 6 x annual salary
67 8 x annual salary

Before you kick yourself for not having enough savings -- or celebrate for being ahead of the curve -- it's important to take a close look at the assumptions Fidelity used to come up with these numbers. Here's the list of assumptions (in bold), followed by my commentary.

You'll want to replace 85% of your income in retirement. This can be much smaller if you learn to live below your means and avoid the "hedonic treadmill," which leads people to spend more as they earn more. Many retirees survive on less than 70% of their pre-retirement income.

You start saving 6% of your salary at age 25 and then move the percentage up by 1% per year. This is great if you can follow through on such a plan.

Your employer contributes 3% of your salary to your retirement savings each year. This usually comes in the form of a 401(k) match. Many companies offer more, while others may not have a 401(k) plan at all. If your employer offers a matching contribution, be sure to contribute at least enough to get the full match.

Your contributions are uninterrupted, and you do not take any loans or withdrawals from your savings before retirement. If at all possible, you should never raid your retirement savings.

You retire at age 67. I have a problem with this one, as the average American retires at 62. Those last five years can make a big difference.

Your portfolio grows at an annualized rate of 5.5%. That's a pretty conservative assumption, given that the market averages 9.1% per year. That said, I think this assumption builds in a nice margin of safety.
Your salary increases 1.5% each year. This is also somewhat conservative -- which is a good thing in financial planning.

You receive your full Social Security benefit.This is also based on a retirement age of 67. That, along with the possibility that benefits could be reduced, makes this assumption suspect.

You will live to age 92. This seems like a safe assumption; it's best to plan for a long retirement, lest you find yourself coming up short in your twilight years.

Obviously, there are many details to consider. While you can play with the numbers all you want, I think Fidelity offers reasonable ballpark figures for gauging your own retirement savings.

What if you're behind?
There are some simple strategies to boost your retirement savings, but the process starts with some boring yet crucial steps: get the maximum employer match in your 401(k), pay off all of your high-interest debt, build up an emergency fund, and spend less than you earn.

Once you have addressed all four of these points, you can start boosting your savings. See if you qualify for a health savings account, which can be a stealth method of saving for retirement. Open and start funding a Roth IRA. And make sure you choose investment vehicles with low fees.

If you're already nearing retirement and you need to boost your post-work income, check out how to add tens of thousands to your Social Security benefits, too.

The $60K Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could ensure a boost in your retirement income of as much as $60,000. In fact, one MarketWatch reporter argues that if more Americans used them, the government would have to shell out an extra $10 billion. every year! And once you learn how to take advantage of these loopholes, you could retire confidently with the peace of mind we're all after. Simply click here to receive your free copy of our new report that details how you can take advantage of these strategies.

 

 

Source

http://m.fool.com/retirement/general/2015/06/29/the-typical-american-is-embarrassed-by-their-retir

 

[Electric Venus 484]

no one gets rich from working for someone else and anyone who disagrees is an idiot. getting a job is honestly one of the worst lifestyle choices you can make tbh, unless you're not smart enough to make money without being someone else's b---h

[pie-kun 1,765]

How are people supposed to save for retirement? Jobs are still hard to come by, people who do have jobs have stagnated wages and the cost of living (particularly rent) is still increasing. Millennials in particular are having to put off things like car and home purchases because of student loans, let alone thinking about putting stuff into the bank for retirement and I don't see this trend breaking anytime soon.

Retirement seems to be becoming a thing of the past. 

[Computer 10,980]

no one gets rich from working for someone else and anyone who disagrees is an idiot. getting a job is honestly one of the worst lifestyle choices you can make tbh, unless you're not smart enough to make money without being someone else's b---h

I'm not smart enough to make money without being someone's b---h.   

How are people supposed to save for retirement? Jobs are still hard to come by, people who do have jobs have stagnated wages and the cost of living (particularly rent) is still increasing. Millennials in particular are having to put off things like car and home purchases because of student loans, let alone thinking about putting stuff into the bank for retirement and I don't see this trend breaking anytime soon.

Retirement seems to be becoming a thing of the past. 

It's almost impossible.  I agree in particular about the student loans.  It's a new issue facing this generation more than in the past.

[FGGrayson 9,670]

I DO save money, and acording to that i have saved a little bit more than i was suppose to at my age in only 3 years & i'm one of those who aren't smart enough to make money without being someone's b---h, so sle a bit i guess

[Economy 52,861]

How are people supposed to save for retirement? Jobs are still hard to come by, people who do have jobs have stagnated wages and the cost of living (particularly rent) is still increasing. Millennials in particular are having to put off things like car and home purchases because of student loans, let alone thinking about putting stuff into the bank for retirement and I don't see this trend breaking anytime soon.

Retirement seems to be becoming a thing of the past. 

retirement age is also too low. With longer life expectancies, aging population, falling birth rates, and longer school years, the labor force is shrinking now barely 60% of the population

 

Thats a problem for the economy in itself

[theMonster5 74]

I've been working the past 10 years and I've been saving for retirement big time. Check out one of my three retirement accounts I set up. Keep saving and invest aggressively in stocks and see your money grow. How am I doing? lol   

[RAMROD 117,134]

People should balance their savings with what they spend.

Think ahead. If you don't afford to pay for a big house, or that latest gadgets, or new car, or luxury clothes, do not force yourself to buy it cos it is not worth it.

Financial management is important.

Nothing wrong with second hand car so long well kept.

Many young people today wish to be big at a sudden, that won't work.

Say a house, OK if you got a big house or expensive car, what next?

Can you afford the mortgage? 

The monthly maintenance?

The insurance?

Lotsa things to consider hence buying a house, or/and a car,  are called big decision to make.

Start small and gradually bigger, that is how things go.

 

 

 

no one gets rich from working for someone else and anyone who disagrees is an idiot. getting a job is honestly one of the worst lifestyle choices you can make tbh, unless you're not smart enough to make money without being someone else's b---h

Try different job, I got rich from it.

Engineering give lots of $$$

Of course that is also thanks to my savings habit though.

[Pandemiya 61]

I've been working the past 10 years and I've been saving for retirement big time. Check out one of my three retirement accounts I set up. Keep saving and invest aggressively in stocks and see your money grow. How am I doing? lol   

How did you do this?  

[theMonster5 74]

How did you do this?  

It's quite simple. I just worked and saved my money. Each year in the U.S. you can put $5,500 into a Roth IRA so I did that for 10 years by mostly invest in Vanguard Small Cap and Mid Cap Stocks mutual funds. In a Roth IRA, when the funds earn interest, dividends and capital gain, it's tax-free and when I take the money out it's tax-free too. Is that a lot of money to you? LOL

[Yves 1,891]

I've been working the past 10 years and I've been saving for retirement big time. Check out one of my three retirement accounts I set up. Keep saving and invest aggressively in stocks and see your money grow. How am I doing? lol   

Impressive.

[Luc 4,776]

no one gets rich from working for someone else and anyone who disagrees is an idiot. getting a job is honestly one of the worst lifestyle choices you can make tbh, unless you're not smart enough to make money without being someone else's b---h

Depends on what job. High-educated jobs earn a lot (€80000+/year) and with that you should be able to become a millionaire in 25 years if you save €20000 a year and invest with a yearly dividend of 5% (quite high these days though).

[Computer 10,980]

I've been working the past 10 years and I've been saving for retirement big time. Check out one of my three retirement accounts I set up. Keep saving and invest aggressively in stocks and see your money grow. How am I doing? lol   

  

When will I   

I recognized Vanguard website   I have a very small amount with them, but they are the best.