There are so many issues and numbers I want to discuss in this article that it can be daunting. But the statistics will show, we all need to do more to plan for our retirements. Who knows how much longer Social Security and Medicare will be around and even if they are around when you retire it won’t be enough. Hoping that these two programs will provide for all of your needs is the pinnacle of madness. A recent survey by Bankrate showed that the number one financial regret most people have is not saving enough for retirement.
I wrote an article recently about whether your retirement account was average or not. Essentially, you don’t want it to be. We simply aren’t saving enough, no matter what generation you are in. We have to do everything we can to set aside as much as we possible can for retirement. Even if you have no plans for retirement, you might not have a choice due to circumstances out of your control. Neither working forever nor believing the government will provide for all of your needs are plans for retirement success.
Lets first look at the Baby Boomer generation who is retiring in large numbers each day. According to Fidelity, recent female retirees will need $135,000 just for medical costs during retirement. Men will need $125,000. That is only one cost, and it is a massive chunk of money on its own. Even more disturbing Bankers Life Center for a Secure Retirement conducted a study that found only 25% of baby boomers were currently debt free. Baby Boomers are retiring with very little of their own savings, dependent on government programs that are not keeping up with the increases in the cost of living and they can barely see out from under the pile of debt that they’ve accumulated over the years. It is not a pretty picture.
Lets go to the exact opposite end of the spectrum, the Millennials. According to a Wells Fargo survey, 64% don’t believe they will be able to save a millions dollars by the time they retire. Also, 74% of respondents don’t think Social Security will be around when they retire. I completely agree with the sentiment of the second statistic but I have an issue with the first one. I know for myself I don’t believe that a million dollars is going to be enough. Never the less, if less than half of Millennials think they will be able to save a million dollars, I wonder how many think two or three million is a possibility. I’ve saved the scariest stat for last. According to a study done by the Indexed Annuity Leadership Council, 37% have not started to save for retirement. 54% have $5,000 or less saved so far. Time is the greatest savings gift we have and seeing that many are not using this asset is problematic on a Titanic hitting an iceberg scale.
I’ve thrown a lot of stats and figures at you but you have to be asking, so what do I do about this? Save, save like your life depends on it because it does. Save early, save often, save all you can. Once you believe you’ve saved enough, save some more. Moral of the story is to save until it hurts, save until you believe you can’t save anymore and then save some more. We can do this, these issues don’t have to keep making headlines because we can crush this issue. We have to get on track and by doing so we can accomplish not only our retirement needs but also our retirement dreams.