What do Americans fear most about retiring? Living too long. They don’t have a death wish, but they’re afraid of running out of money before they run out of time.
But they aren’t doing anything about it, according to a new survey from Indexed Annuity Leadership Council (IALC). One-in-4 Americans have nothing saved for retirement.
“As Americans are living longer, it’s no surprise that the number one retirement fear is that their savings will run out leaving them broke in their final years,” says Jim Poolman, Executive Director of IALC. “The uncertainty of knowing if your retirement funds are enough to cover your entire life can be crippling.”
Money for life?
Older Americans who are scared about outliving their savings aren’t actually sure how much they need to survive in their elder years. According to the survey, 25 percent of baby boomers have less than $5,000 saved for retirement. Millennials, the age group furthest away from retirement, may not be well off, either: 37 percent of young adults have nothing saved for retirement, even though overall, most Americans admit they should have started sooner.
Turns out many of us can’t imagine living until 100 and even more so, can’t imagine having enough money to last us our whole lives. Even if you can’t budget for being 100 years old, you can at least try to make it to 80, the average life expectancy.
Playing catch up
There’s a reason they call them “catch-up contributions.” Americans who are 50 and older can add thousands of dollars a year to their retirement accounts, including 401(k)s, 403(b)s, and others. The amount you can contribute varies depending on the account you have, but workplace contributions allow an extra $6,000, which could get you $24,000 a year in total contributions. Don’t forget to take advantage of employer-matched 401(k)s.
Work as long as you’re able. You can collect Social Security as young as 62 years old, but the longer you wait, the more you can collect later. Full retirement benefits don’t kick in until 70. If you can hold out, you could see up to an 8 percent increase in benefits for every year you wait to receive Social Security payments.
Younger? Start saving now
According to the IALC survey, more than half of millennials have less than $5,000 saved for retirement. While it could limit your spending now, look toward the future: putting $100 a month into a retirement fund has much different results if you’re 20 years old versus if you’re 40. The younger you are, the more likely you’ll have enough money saved by retirement age.
Avoid waiting to plan your retirement years. Where you live and how you live can have a huge impact on how much money you’ll have by the time you retire. While it may seem like a long and laborious process, a little savings early on can go a long way, especially if you’re investing it well.