While it’s no shocker, more than half of working-age Americans are at risk of seeing their standard of living drop in retirement. Most American’s admit that they are well behind when it comes to preparing for retirement.
This poses an interesting question: How do people have a sense of whether they’re planning effectively for retirement? And what might be the cause for so many people having the wrong impression of where they stand in their retirement savings? Well, the answer really depends. For example, while not all the individual’s who’ve owned a home or qualified for a traditional pension were too pessimistic about their retirement prospects, we find that such households were more likely to fall into the “worried” category.
In contrast to the over-worriers, high income might lead to overconfidence with retirement planning,because the reality is that the more you earn, the more you’re responsible you are for funding your own retirement.
Finding a balance is important. While being “too worried” or “better prepared” for retirement may not be too problematic to you. You may be saving too much of your income for retirement. Saving too much could mean that you’re not using your income to enjoy life during your working years.
So what can we do to ensure a comfortable retirement?
The only way to better gauge where you stand is to periodically check your savings progress. For example, you can get a decent idea of whether you’re on track to a secure retirement by using online tools and retirement income calculators. Try plugging in what you’ve saved so far for retirement, the percentage of income you’re contributing to retirement accounts each year and it will give you a projection.
If you’re not confident doing this alone and want to learn more about how to effectively save, you can always find a financial advisor. Explain your goals to them, and they’ll be able to plug in these numbers for you for an accurate projection. Either way, gauging your progress every couple of years will give you time to improve your savings strategy!
