Almost half of Americans Don’t have a dedicated retirement savings account, according to the Federal Reserve’s 2022 Consumer Finance Survey. The study, which included the most recent government data, found that only 54.4% of U.S. families reported having a dedicated retirement account. 401(k) or Islay.
While they may be saving for retirement outside of these accounts, very few survey respondents said they have other investments.For example, just 1.1% directly owns corporate bonds And only 21% own stocks directly.
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Many Americans who spent their golden years relying solely on Social Security benefits may be in for a terrible awakening.of average profit According to the Social Security Administration, the monthly premium for retired workers is $1,907, or $22,884 annually.this is not that expensive Poverty threshold in 2022 $17,710 for people 65 and older in a two-person household, according to Census Bureau data.
There are several factors that determine how much you should save for retirement, and age is an important one. So how can you compete with your colleagues?
Median savings vary by age
Of course, the Fed’s numbers are the total for all age groups. So if you’re just starting out, you may not have a retirement account yet, and your savings may grow as you get older. So you might be wondering how you compare to others in your age group.
The percentage of people with retirement accounts increases between ages 55 and 64, according to Federal Reserve data. Until the age of 75, older people have larger savings, but once they reach the age of 75, their savings are likely to decrease due to withdrawal of retirement benefits.
The breakdown of the data by age group is as follows: Median retirement account and ratio Number of people with such accounts.
If you’re far behind others in your age group, these numbers can be a call to action. However, the amount of savings needed at any age varies from person to person. Even if you save less than others your age, you may be fine. Conversely, even if you are ahead of others in your bracket, you may not be reaching your retirement goals.
read more: Suze Orman says Americans are poorer than they think, but knowing these things can make living the retirement of your dreams much easier. 3 easy money moves
Developing a retirement plan
The first step in creating a savings plan is decide how much money you need Due to retirement. Consider how old you are, when you plan to retire, where you plan to retire, how you plan to spend your retirement, and how many dependents you have (if you have any).
Also consider that while your expenses may change, they won’t necessarily go away after you retire. For example, even if you pay off your mortgage, your medical bills may increase. The size of your nest egg is determined by these expenses and how much you need to withdraw each year to fund them.
Strategies include: 4% rule, where they live by withdrawing 4% from their assets every year. Other approaches rely more on total returns that adjust to market fluctuations (and personal circumstances such as long-term care and other medical expenses).
it is possible to catch up
A 2023 study released by Northwestern Mutual found that Americans It was expected to cost $1.27 million. Save money to retire comfortably. If you compare this number with the Fed’s data, you’ll see that many people are falling short. But there may still be hope.
How much you can save depends on your income and expenses during your working life, as well as your investment return.A financial planner is invaluable in helping you devise a strategy Things are going smoothly.
But don’t be discouraged if you fall far behind. It’s not easy, but it’s possible. catch up. To do this, you will need to pay off debt, decide on the investment vehicle that best suits your goals, and explore additional sources of income.even if you are 55 years old or retirement age without savingsYou can also downsize your home, consider a home equity line of credit, cash out an insurance policy, or sell an asset like a second car.
Everyone’s retirement savings plan is different, but your nest egg should grow as you get older. If you’re falling behind, now’s the time to make a plan to catch up.
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This article is for information only and should not be construed as advice. PROVIDED WITHOUT WARRANTY OF ANY KIND.