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What’s Holding Americans Back From Saving for Retirement?

retirement savings

The truth is, for most American workers, saving for retirement just isn’t a priority, and because of that, a huge majority of us have fallen way behind on where we need to be in order to be ready at retirement age. What’s even harder to swallow is that it appears as if the trend is getting worse, despite warnings and a push to get people enrolled in 401Ks, and IRA plans.

One of the biggest problems with this is that most workers think that they will eventually have enough to be able to retire comfortably, despite their lack of savings in the theoretical bank right now.

Other financial needs

Retirement seems like such a long way off, and it’s increasingly difficult to make the right decisions at the moment. Long term goals can be daunting, especially if you’re starting at square one, but think of it this way: if you keep putting off the inevitable, and most definitely hard discussion about retirement, when will you actually do it? If not now, when?
By waiting, you will have missed out on years and years of contributions and potential compound growth. Think of your retirement savings as investing in yourself, and making your future a priority.

Lack of knowledge

Familiarizing yourself with the retirement world is essential. Knowledge is of course power, and keeping yourself in the dark will only hurt you in the long run. Most people think of a 401K or of a pension plan that their work offers when they think about retirement planning, but it’s surprising to know how many don’t know much beyond that. Your retirement planning and investing options don’t have to be just limited to those. A self-directed IRA, whether traditional or roth, is perfect for those who want diversity, because your investment options are pretty much left to your imagination.

Age plays a factor

A very large reason for this lack of financial responsibility is age. Millennials want to spend, and baby-boomers think it’s too late to make a dent in their retirement savings. It’s never too late to get a hold of your finances, and really start making changes. There are so many options and resources for people of any age. Setting goals, taking full advantage of catch-up contributions, and timing your retirement is key.

Social Security

Putting too many eggs in one basket is risky, and flat out irresponsible. It’s quite counterintuitive that people are afraid of investing for fear of the risks involved, and then rely so heavily on an even more unreliable system like social security. The future of Social Security being available at retirement age is uncertain at best, as it’s always possible that changes could be made to the program. The average monthly income that retired workers receive per month is about $1,300, which is less than $16,000 a year, and it’s very likely that more will be needed to cover expenses. Instead of relying on Social Security, look at it as an aid, and just as one potential source of income.

Fear of the unknown

There’s no way around it, it’s daunting. But shouldn’t that thought also be a motivator? That there’s no way around retirement. It will catch us all, so why not do something about it while you can? Where there’s a will, there’s a way. That’s just American ingenuity.

Author: Tanya