Georgians worry about retirement.
In a Georgia Credit Union Affiliates survey administered in June featuring 8,069 respondents, about 73 percent said they had at least one major financial concern about retirement. More than half of the survey’s respondents – about 56 percent – have already retired from full-time employment or plan to retire in the next five years.
Georgians’ financial fears surrounding retirement vary. Most – 20.6 percent – are afraid they’ll lose what they’ve invested in retirement accounts due to stock market fluctuations. Another 18 percent worry they just won’t know what they need for retirement and 15.8 percent fear they won’t have time to save what they need, even if they could identify that magic number.
Georgians aren’t alone with their retirement jitters. In a study of 3,000 Americans by financial firm Allianz Life, 63 percent reported that they feared running out of money in retirement more than they feared death. The study – which included 1,000 baby boomers, 1,000 Gen Xers and 1,000 millennials – found that half of baby boomers believe it is impossible to determine retirement expenses.
Another 32 percent of baby boomers nationwide are unsure they’ll ever be able to retire; and 10 percent of Georgians feel the same way.
These fears are understandable – saving for retirement can be daunting. Conventional wisdom once dictated that workers should save $1 million by the time they retire, but experts now suggest that won’t be enough, according to a U.S. News and World Report article.
Experts traditionally suggested retired people withdraw 4 percent of their savings each year. That would leave a retiree who has a $1 million nest egg about $40,000 to spend annually. On average, adults 65 and older spend almost $46,000 a year, according to a GoBakingRates survey. With those same withdraw rates in mind, the average retiree would need to save closer to $1.15 million before leaving the workforce.
Many Americans aren’t ready for that reality. According to GoBankingRates, 42 percent of Americans have less than $10,000 saved for retirement and 14 percent have nothing saved.
But retirement statistics aren’t completely bleak. Saving for the end of a career may be intimidating – but Americans have been improving.
Baby boomers in the Allianz study showed signs of actively securing help with their retirement savings, a move they hadn’t successfully made in the past. In 2010, 46 percent of boomers said they lacked the tools to figure out how to save for retirement. That number dropped to 36 percent in the most recent study.
Most Georgians, 70.7 percent, are also proactively seeking help saving for retirement. According to the Georgia Credit Union Affiliates survey, 20.3 percent of respondents employ a financial planner. Another 15.1 percent rely on advice from their financial institution, while 13.2 percent seek help from family and friends.
This proactivity has been paying off. The majority of Americans have more than $10,000 saved for retirement. That was not the case in 2017, when only 45 percent of respondents had more than $10,000 saved for retirement, according to a GoBankingRates survey from the time. The number of people with nothing saved for retirement also dropped dramatically between the 2017 and 2018 surveys – by 20 percent.
It’s a change America’s retiring population has been feeling. According to Allianz, 72 percent of baby boomers said in a recent survey they feel financially prepared for retirement. That’s up from 57 percent in 2010.
- Tips to save for retirement:
- Start now.The earlier you can start saving for retirement, the better prepared you’ll be. Money in retirement savings accounts accrues compound interest, meaning each year the money in that account generates earnings which, in turn, generate their own earnings. The longer the money sits in the account, the more earnings it will generate. Ideally, consumers should begin saving for retirement as soon as they receive their first paycheck in their 20s. But, if that’s not your reality, it’s important to begin saving as soon as you’re able.
- Automate your savings. It can be difficult to put away money for a retirement that can be decades away when you’re focused on affording the present. You may be tempted spend that money on bills, groceries and other immediate necessities. Consider setting up your retirement savings to pull directly from each paycheck. The money will never hit your checking account and you’ll be less inclined to spend it on daily necessities.
- Increase savings with increased funds.While it can be beneficial to automate your savings, it’s equally as important to revisit your retirement account contributions over time. If you receive a raise, for example, consider increasing the amount you’re contributing to your 401(k). In addition, consider saving a portion of the money from any bonuses or tax refunds you receive throughout the year.
- Make sure you’re getting your company’s match.If your employer offers a match to your employee retirement plan, make sure you’re contributing enough to receive it. Otherwise, you’ll be leaving money on the table that could have helped toward your retirement goal.
- Take advantage of government aid. The U.S. government provides incentives for those saving for retirement. For instance, middle or lower-income taxpayers can claim a tax credit for up to 50 percent of their retirement plans. The maximum credit is $4,000 per couple and $2,000 per individual filer. You can also take advantage of catch-up contributions if you’re age 50 or older. Yearly contributions to IRAs and 401(k) plans are limited, but once you reach 50, you’re eligible to contribute beyond those limits.
- Seek help. Saving for retirement is a major undertaking and one that can be confusing. There are online resources available (AARP has a retirement calculator available that can help determine whether you’re on a good track, for example), but often personal advice can be helpful. Consider hiring a professional financial advisor or utilizing help from your financial institution. For more or to find a credit union near you, visit org.
Candace Mills, a CUNA Brokerage Services, Inc.* financial advisor working for Georgia’s Own Investment and Retirement Services, said she sees plenty of members concerned about affording the end of their careers.
“The biggest concerns people normally face when saving for retirement are knowing how to save and how much,” Mills said. “The amount an individual needs to save for retirement varies. People have different lifestyle needs, income goals, retirement goals, health concerns, etc. During our planning process, we discuss those concerns – along with many others – to help members determine what is the appropriate amount to achieve their goals.”
That’s not to say people can’t successfully reach their retirement goals without a professional’s guidance. Mills said people with traditional employment may get all the help they need from their employer.
“If an individual has access to an employer retirement plan, such as a 401(k), 457(b) or 403(b), they should take advantage of making contributions to their employer plan. In some cases, their employer may be willing to match part of their contributions with a vesting plan in place allowing the employee to take a portion or all their matched contributions with them at time of separation or retirement,” Mills said. “If those types of plans are not offered or the individual is self-employed, they may want to speak with a professional to determine what type of retirement account would be most suited for their needs.”
What’s most important, she said, is that people with tricky retirement savings situations or people who are uneasy about their retirement savings seek help as soon as possible.
“It’s never too early to seek professional retirement advice,” Mills said.
In fact, she said beginning retirement planning immediately is the best advice she can give to anybody in the workforce.
“It’s never too early to start preparing for retirement,” Mills said. “I started my first retirement account while I was in college and working full time. The sooner you start, the more likely you are to achieve your retirement goals and build a solid roadmap for your retirement years.”
*Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. Representatives are not tax advisors or attorneys. For information regarding your specific tax situation, please consult a tax professional. For legal questions, please consult your attorney. FR2281529.1-1018-1120