Americans Rely on Guesswork for Retirement
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(ARA) - Thought about your retirement lately? If you haven’t, you’re not
alone. According to a recent survey conducted by Thrivent Financial for
Lutherans of 1,000 American adults, nearly two out of three (62 percent)
non-retired adults have never estimated how much money they would need for their
retirement years. “Financial ignorance never serves people well,” says Todd
Gillingham, a partner with Thrivent Financial, a Fortune 500 financial services
organization. “Estimating how much you need to accumulate for your retirement
years is a critical first step in achieving a comfortable future.”
So how much do you really need to save for retirement? A few hundred thousand
dollars? A million? More? Not surprisingly, the answer varies depending on one’s
age, health, marital status, income, assets, preferred lifestyle and dreams,
among others, according to Gillingham. But regardless of whether an individual
is five months or five decades from retirement, delay in planning for retirement
can be costly.
“As a general rule, people are retiring earlier and living longer,” says
Gillingham. “In addition, eligibility for full Social Security benefits is
creeping upward, making it necessary that individuals plan carefully and set
aside more money for their retirement years than they might expect.”
Unfortunately, most Americans aren’t acting on that message. More than half
(52 percent) of non-retired, working Americans have either not started saving
for retirement or have saved less than $10,000 for their long-term retirement
needs, and just 10 percent say they have personally saved more than $100,000,
according to the survey. This, despite the fact that it may be necessary for
many Americans to save more than $1 million to fund a comfortable retirement.
Why don’t Americans simply save more? For most, it’s a matter of “not
having enough.” The Thrivent Financial survey found that among those who haven’t
started saving for retirement, 54 percent simply say they don’t have enough
money, 21 percent say it is too early and 17 percent say they haven’t’
gotten around to it yet. Just 3 percent say they don’t think they need to save
for retirement.
However, according to Gillingham, lack of money is not the true stumbling
block that keeps people from achieving their financial goals. “A lack of money
most often reflects individuals’ commitments to short-term priorities that
keep them from addressing their long-term financial needs,” said Gillingham.
Fortunately, nearly half (49 percent) of working Americans say they began
saving for retirement by age 35. Still, that means most working Americans are
pushing retirement accumulation to the mid- to late stages of their working
careers. Why does this matter? As a hypothetical example, a 20-year-old who
invests $80 monthly in an investment vehicle earning a constant 10 percent rate
of return (compounded monthly) will accumulate more than $1 million ($1,025,535)
at his or her retirement some 47 years later. By contrast, a 45-year-old who
invests $1,000 monthly in that same vehicle will accumulate just $953,173 by
retirement, a difference of more than $72,000. Time is on the side of the
steady, systematic investor.
“Retirement is a need that simply cannot wait,” notes Gillingham. “Time
is an individual’s most valuable ally in achieving his or her retirement
goals.”
A financial professional can help individuals identify personal retirement
goals and put strategies in place to achieve those goals. For more information
about retirement planning, including retirement planning calculators, visit:
http://www.thrivent.com/planning/tools.
Courtesy of ARA Content
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