As you plan for the future, there are s few retirement statistics you need to look into to help you plan for it better. As you start with the desire to have a better life when you retire, you need to put together a plan of action. With that, it is helpful to make sure that you have an idea what the retirement landscape is. It will help you plan better which will improve your chances of reaching your goals.
In anything you do, it is helpful to have a clear picture of what the trend is. It does not mean that you will do what everyone is doing. Remember that just because a lot of people are doing it means it is okay and acceptable. It that is the case, then you wouldn’t mind if you send your car payments late. This is because the New York Fed shares that over 7 million car owners in the country are 90 days or more late with their car payments.
One thing you get out of knowing some of these retirement statistics is having an idea which areas to improve on. It is extremely helpful if you know where the challenging areas are in saving for retirement. It gives you the chance to make improvements in your financial plan. This makes the journey for you a lot less challenging.
Retirement is one of the areas in your life that will happen no matter what you do. You are in a race for time in making sure that you have enough in your account to support your needs. It is even a terrifying thought to think about not having a job and relying on what you have in the bank. However, it can also be one of the most exciting times for you. You just have to get a clear picture of what you are getting into. Here are some of the statistics you need to be aware of as you plan for your retirement.
There are people who have no retirement savings
According to a study by Northwest Mutual, over 20% of Americans have no retirement savings. This is one of the retirement statistics you need to be aware of. It would be hard to try and pinpoint the exact reason. What is sure is that these people will have a tougher time planning for their retirement years especially if they are already advanced in years.
For one, these people would have to put a lot more every month until they hit their retirement year. This is because they are trying to make up for lost time in compounding their savings. They would have to put in a lot more to be able to retire. It can add additional financial stress as they try and allocate more into their retirement fund.
One possible scenario from this is that people might find the need to work for a lot longer time. This is because they are trying to make up for lost time. Rather than being able to retire early, people would need to extend their working years just to fund their retirement accounts.
Free money is one of the shocking retirement statistics to know about
If free money is on the table, there is no reason not to take it. However, a lot of people are doing just that. They are letting go of free money specifically meant for their retirement. Financial Engines research shows that there is about $24 billion unclaimed 401(k) company matches annually. That is a lot of money for retirement.
The first thing you need to do is find out if your company offers a matching program for your 401(k) savings. A matching program is quite easy to grasp. As the name suggests, the company you work for will match what you put into your 401(k) up to a certain percentage. This is a great way to bring your savings up as you work for the company.
However, a lot of people are not taking advantage of it. For one, they might not know about the program. It is also possible that they are not maxing out their savings to be able to get the most out of the matching amount. Sometimes, employees leave the company early voiding the money the company put in because of the vesting schedule.
A lot of people make early retirement withdrawals
One of the retirement statistics you have to know is that people seem to take out early withdrawals from their retirement money. Transamerica Center shares that almost 3 out of every 10 people tale some form of a loan or early withdrawal from their retirement account.
This can lead to a lot of financial problems. For one, early withdrawal can result in fees. You might have to pay an additional fee if you take money out earlier than allowed. It can put more stress on your retirement savings.
One thing this does is that it prevents your fund to grow over time. If your principal amount is lessened, the growth will follow suit. Your funds will grow in relation to how much you have saved up. This can push your retirement date further than you have planned. As earlier mentioned, this could keep you in the workforce or a longer time.
Taking out money from your retirement fund can bail you out when you have emergencies. You might have some medical emergencies you cannot put off. A child might be going off to college and you want to help. It is also possible that you want to pay down the house much sooner or you have to pay a high-interest loan.
Tips to address these retirement concerns
Now that you have a good idea about some of the retirement statistics you need to overcome, here are some of the action points you can look into to help you do just that.
Save as early as possible
You need to start including your plans for retirement on your first paycheck. The earlier you start, the sooner you can retire. It also helps to start early because your fund grows bigger over time. This is the benefit of working with compound interest. Your money grows over time helping you reach your retirement goal sooner.
Take advantage of free money
As mentioned earlier, there is a lot of free money being taken for granted. If you do not want to be part of that statistic, take advantage of a matching program. It increases your retirement account by doing what you need to do in the first place. It is similar to getting rewarded for saving for retirement. You just have to talk to your company about the details.
Save for emergencies
If you do not want to constantly take out money from your retirement fund, you need to start saving for emergencies and other needs. If you plan to help your child in college, get a 529 plan for their use. It will also make it a lot easier for other family members to chip in for your child’s college expenses if they want to. Strengthen your emergency fund as well so you have an account you can use when you go through unexpected chapters in your life.
It is important to have an idea about some of the retirement statistics as you plan for your own retirement in a few years. It can help you understand the landscape you are getting into and make better preparations for it.