Study Finds Americans Are Not Saving Enough For Retirement

There’s good news, and there’s not-so-good news when it comes to how Americans are saving for retirement. Let’s start with the good news: More people are saving these days, and many are starting earlier. The not-so-good news is that we are, on average, putting away only about half of what we need to save, according to a recent study from the Stanford Center on Longevity.

How much should we be stacking away for retirement? According to the Stanford report, Americans should allow 10% to 17% of their income for post-work life, if they plan on calling it a career at age 65. This is true even if you start saving as early as age 25, says the research.

Okay, so how much are we actually saving? Research on the issue has found that family members aged 25 to 64 tend only to sock away a median amount of between 6% to 8% of their income.

“It’s not enough just to say, ‘Are people saving for retirement,’” said Stanford researcher Tamara Sims told CNBC. “When you break it down and look at what amount they’re contributing, it’s at least half of what they should be.”

While many companies today automatically enroll employees in 401(k) retirement plans with a default contribution rate, this practice has been a mixed bag. Sure, more people are saving, so that’s a positive. But, the new approach has also made some folks complacent about their retirement planning, Sims said. “They’re not necessarily making the optimal decision for them, as an individual,” she said.

And, only about half of Americans have access to a retirement savings plan at work. Researchers at Stanford also looked at whether employees are making up for insufficient (or nonexistent) workplace savings by personally taking the reins. It turns out that on average, they’re not.

“In American culture, we don’t like to think about [aging],” Sims posited. “That has huge implications for how much people are willing to take time planning for their long-term future.”

Sims is a believer in one particular intervention that has shown positive effects. In this simulation, people are shown a digital image of their future self. Then, “they’re more willing to put money in a retirement account,” she said. And, other research has shown that envisioning what you want your retirement to look like helps spur saving.

While Stanford’s findings may not be the best news, it’s not the worst, either. The truth is that you can still have a comfortable retirement based on your unique planning goals and strategy. It’s never too late to start saving!

And, here’s some even better news. Based on my own research from late last year, when you start saving has no bearing on whether you’ll be a happy retiree. If you start saving the day you turn 18 or later in life, you have the same chances of having a retirement marked by happiness, so long as you hit your particular financial benchmarks. And, dollars and cents aside, isn’t happiness what we all want?

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