Saving for Retirement

Saving for Retirement

In case you missed it… LIMRA, a worldwide association of financial and insurance services companies, recently released a survey showing that 49% of Americans aren’t saving anything for retirement. Zip. Zero. Zilch. Nada. Nothing.

Not surprisingly, those in the youngest age group (18-34 years old) are doing the least, with 56% of respondents reporting that they’re not saving for retirement.

At the same time, the average respondent answered nearly half of the questions about IRAs incorrectly, betraying a lack of knowledge when it comes to the available tools for retirement investing. And when comparing IRA owners to non-owners, the former group only narrowly outscored the latter.

Interestingly, an earlier survey by the same group found that only about a third of Americans feel like they’re saving enough to support them throughout their retirement.

When combined with a strong movement away from defined benefit (i.e., pension) plans and ongoing concerns about Social Security, the above results suggest that we’re headed for a retirement crisis.

I’d be willing to bet that the typical FCN reader is well above average when it comes to things like saving for retirement, but I’d still like to hear from you. Are you saving for retirement? If so, how much (as a percentage of total income)? And in what type(s) of account(s)? Traditional or Roth IRA? 401(k)? 403(b)? Etc.

As for us, I’m maxing out my available employer-related accounts, stashing away a bit more from self-employment income, and my wife and I are also maxing out our IRAs (using the backdoor Roth approach). What about you?

13 Responses to “Saving for Retirement”

  1. Anonymous

    Retirement is expensive. Take charge of your financial future. The key to a secure retirement is to plan ahead. Start by requesting Savings Fitness: A Guide to Your Financial Future and, for those near retirement, Taking the Mystery Out of Retirement Planning.

  2. Anonymous

    I’m married, both of us about 30. I put 3% into a simple ira to get the max 3% match. Then we max out our Roth IRA. That comes out to about 10% of our gross income. I try to take another 10% and either save or invest it or use it to pay extra on our debt (only mortgage and student loans left). Some months we don’t quite hit that 10% extra mark, but we’re usually fairly close. My husband becomes eligible for a Roth 401K later this year, so we’ll adjust things to max out the company match there when that time comes.

  3. Anonymous

    We have something like 50% of our gross income automatically contributed to a mix of 401(k), 403(b), defined contribution pension plan, Roth IRAs, 529, and 527 plans. Some of those are retirement, some for early retirement, and obviously the 529 is for (our offspring’s) education.

  4. Anonymous

    I am also not surprised that the age group (18-34) are not saving for retirement. I am not sure of the percentage of educated people who are investing compared to those with a high school diploma, but I would assume that degree holders are investing at much higher rates.Those who are educated enough to understand the value in investing are now limited because of their massive student loan debt which was an average of $27,200 for the class of 2011.
    That is the boat I am in at age 26. I want to invest as much as possible but right now my wife and I are barely able to manage investing in her 401K. We only make it work because of the 50% matching contributions by her employer. All of our money goes to paying student loans. Even if we did have extra money the rates (6%-8%) on our federal and private student loans exceeds the return on a decent investment. Somewhere around 34 I will have hopefully paid off my $80K student loan debt and be able to begin investing heavily for retirement. Oh wait….my kids will be needing to go to college. There is no hope. See my blog about how I survive my massive debt on a teacher salary.

  5. Anonymous

    Between 17 and 31% depending on what qualifies as retirement savings. My wife and I both max out our 401(k) with 5% match. That’s 17% of pretax income. If you add our principal payments on a home equity line of credit (used to pay for a substantial home renovation), then we’re at 31%. It would be even higher but for high child care costs. We sometimes wonder where our money goes because we do have high incomes, but never seem to have large amounts of discretionary cash. Then we remember we take it out of our control with auto pay/invest programs.

  6. Anonymous

    I’m 32, married, wife stays home with our two kids.

    We max out our Roth IRA’s and max out my SIMPLE IRA at work, and saving more as cash/pm. Currently we’re saving 50% pretax, looking to change jobs and cutting expenses this summer to save 75% pretax.

  7. Anonymous

    Late 30’s and taking advantage of the company Roth 401k… always trying to follow the pay myself first mantra. I do wish I could have done more when I was younger as compounding is the key to a secure retirement. Nice Post!

  8. Anonymous

    I’m 27, I put in 5% to my 401k to get the match, and I max out the Roth every year.

    I have done some financial projections and even using very conservative numbers(assuming only 3% returns above inflation) I should come out okay in retirement.

    The key is that I never had any debt to deal with, just a mortgage now.

  9. Anonymous

    We save 16% (before tax) for retirement in a combination of maxed out Roth IRAs and an employer sponsored SIMPLE IRA with 3% match (for a total of 19% savings…).

    We save 25% of our pre-tax income altogether, including the retirement savings, a rainy day fund, and a new car fund.

    I think the real key to saving is starting young and small, then increasing when you can. I recently got a raise and used some of it to increase our savings by 1%.

  10. Anonymous

    My wife and I are taking responsibility for our own retirement. As for those who aren’t saving anything or nearly enough, my guess is they’re consciously or subconsciously counting on their own little ‘taxpayer bailout’ when the time comes, and they’ll probably get it.

  11. Anonymous

    I am 26 and saving 6% of my income into a Roth 401(k). I am also matched up to 6%. I also save an additional 4% in a Roth IRA.

    I am not certain that I am saving enough, mainly because my income is below than expected. However, I take comfort in knowing that I started so early as aggressive as I can.

  12. Anonymous

    oh no… we’ve been found out?! At 55 and 48 we are saving Zip. Zero. Zilch. Nada. Nothing for retirement.

    We live on 1 income (stay at home mom) in a high taxed, high property tax state.

    Actually, that just sounds like an excuse doesn’t it, you can always save something?!

    Besides $30,000 in an IRA from a pre-children era and a $400 a month pension from a long ago career…
    We do own our house.. so I guess that is a nest egg of sorts.

    We have just adjusted our tax withholding to be able to take complete advantage of a company match savings program… but are doing after savings to treat it like an emergency fund.

    Our plan is to work until at least 70 and to go to 2 incomes as soon as the 1st child goes to college.
    We’ll probably have to put most of the 2nd income toward retirement. (I figure if John McCain could run for President in his 70s … we can be content working a regular 9-5 job in our 70s… ?? :))

    My grandfathers worked at least part time until 78 – 79. There is a fair amount of longevity in both families, grandparents lived until 89, 82, 88, 82, 82, 84, 94 one is still living. 2 grandmothers had multiple siblings that lived well into their upper nineties.

    All of that to say… I think working full time or part time for as long as health allows is the way to go plus it gives some structure to your life. Since you could live to 90 something … even retiring at 70 means 20 years in retirement.

    Just 1 way …

  13. Anonymous

    I’m saving as much as I can for retirement–right now, it’s about 15 percent. It used to be higher but I ended up taking a job with a cut in pay (long story). When I was paid more, I saved to the maximum.

    I’m saving as much as I can because I want to do everything in my power to have a well-funded nest egg, but I’m not particularly confident that I will end up with one.

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