Americans struggle to sock away retirement savings

Americans struggle to sock away retirement savingsThe secret to saving for retirement: Save early and save often(Photo: Thinkstock)Retirement planning is complicated for Americans of all age groups. In their early lives, many workers put off saving because they think retirement is eons away … then, in their 40s and 50s, these folks panic and race to catch up.According to a 2014 survey from the Employee Benefit Research Institute, only 64% of Americans have reported saving any money at all for retirement to supplement anticipated Social Security benefits. Those with some savings typically don’t have much. The EBRI survey found that roughly six of every 10 Americans have less than $25,000 in total retirement savings.”Americans just don’t save enough,” says Charles Sizemore, chief investment officer of Sizemore Capital Management in Dallas. “The question, of course, is why?”The obvious answer is that many Americans simply don’t have the means. A recent survey from banking and personal finance portal Bankrate.com found that among people who don’t have a penny invested in the stock market, 53% say that’s because of a lack of money more than a lack of desire.USA TODAY5 steps to planning a secure retirementSizemore says another reason Americans have such trouble with retirement planning is cultural, based on our behaviors and emotions.”Life is pretty stable here, and we have basic safety nets in place. The countries with the highest savings rates tend to have little or no safety nets, and people are forced to fend for themselves in old age. So in a lot of ways, our success and stability have made us a little lax in our attitudes toward saving,” Sizemore says.Couple that with a lack of mandated savings, and you get an understandable problem.”In many countries, 401(k)-style contributions are required by law the same way that Social Security [withholding] is here,” Sizemore says. “To the average 22-year-old in their first college job, the priority is paying the rent. Retirement savings is not high on the priority list.”There is no shortage of other theories on why Americans are so far behind on savings. But experts agree the solution to this retirement shortfall is deceptively simple: Save early, and save often.John Sweeney is executive vice president of retirement and investing strategies at retirement giant Fidelity Investments. He said a recent survey of 5,000 Americans showed the two big factors driving what Fidelity calls “retirement preparedness” were time and money. Other elements such as asset allocation or access to home equity made far less difference.”Saving 1% over 30 years is good, but certainly not as impactful as saving 15%,” Sweeney says. “And then saving 15% for 10 years is great, but not as impactful as saving for 30 or 40 years.”If socking away 15% of your income for decades sounds like an impossible task? Well, you’re just thinking about it the wrong way.As Sweeney puts it, “When people say, ‘You know I really can’t afford to save for retirement right now,’ I say, ‘What if your employer came to you and said you still have your job, but you now make 85% of what you used to make?’ “USA TODAYIt's never too late to save for retirementIt’s all about lifestyle and behavior and making tough choices such as eating out less, forgoing pricey vacations or driving your beat-up sedan a bit longer before taking on a new car payment.Even if that means not getting everything we want and not keeping up with the Joneses.”We’d all figure out how to do it, and we’d create a capacity within our lifestyle to save, first of all, but also have a spending rate that’s living below our means,” Sweeney says. “It really all starts with an effective budget plan.”The results speak for themselves if you manage to find the discipline to save early, save often and put your money to work in the stock market. Consider the following examples:•You’re 25 years old and save $10,000 each year for 10 years until you’re 35 years old, then never save another penny for the rest of your life. You do, however, enjoy a 5% rate of return on your investments each year. By age 65, you’ll finish with about $570,000.

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