It will come as no surprise to learn that millions of Americans are trying to put money away for retirement, with varying degrees of success. Unfortunately, the number of people left behind is shockingly high, putting millions at risk of not enjoying their retirement years.
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58.4% of Americans have less than $10,000 saved for retirement.
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Only 7.2% of Americans have $500,000 or more saved for retirement.
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According to the Employee Benefit Research Institute, more than 50 percent of Americans have less than $10,000 saved for retirement. That’s a big concern, especially considering how shocking it is that a much smaller number have more than $500,000 stashed away for retirement.
When you look at the breakdown of the data provided by the research, there is no doubt that it will shock people of all income and savings levels. According to the study, it found that the following amounts are currently in Americans’ retirement accounts:
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$0 to $9,999: 58.4%
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$10,000 to $99,999: 20.5%
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$100,000 to $499,999: 13.9%
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$500,000 to $999,999: 4%
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$1 million to $4.99 million: 3.1%
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$5 million or more: 0.1%
With these numbers in mind, it’s critical to consider how you can grow your retirement savings.
When the time comes, you should sit down with your spouse or a financial advisor and figure out how much you can save right away. This would include your current level of income, expenses, lifestyle choices, etc.
By knowing your financial position, you can consider maximizing your savings without completely sacrificing your quality of life. This could include creating a new budget focused on reducing discretionary spending that can instead be invested in savings.
As you look at what kind of financial injection you need to move from one level of savings to another, you need to think about what number you really need. As a general rule of thumb, you want to put away about 70-80% of your pre-retirement income for each year you consider yourself not working. This could mean setting a baseline where you put 10%, 20% or even 30% of your annual net income into a retirement account.
This is, understandably, a not-so-insignificant amount of money that goes back to creating a new budget and looking at where you can cut unnecessary expenses. You should try to set up savings benchmarks for different ages so you know how you’re progressing. In other words, turning 30 means you want to put X dollars away. By the time you turn 40, you want Y dollars set aside, and so on.