Most American families, even those close to
retirement, have
little or no retirement savings .
Not surprisingly, younger families have less stashed away. According to
a report from the Economic Policy Institute (EPI), the mean
retirement savings of a family between 32 and 37 years old is
$31,644:
But that number doesn't tell the whole story. Since
so many families have zero savings and since super-savers can pull up
the average, the median savings, or those at the 50th percentile, may be
a better gauge. The median for families between 32 and 37 is a scant
$480:
How big should your nest egg be in your 30s?
According to retirement-plan provider Fidelity Investments, to be
financially ready to retire by 67, you should
aim to have three times your salary saved by 40.
While this can sound daunting, if you're putting your money to work in your 20s, it's not as difficult as it sounds, thanks to
compound interest.
The simplest starting point is to contribute to your
401(k) plan , if your employer offers one. If you
don't have a retirement savings plan at work , you can contribute to other tax-advantaged accounts designed specifically for retirement, such as a traditional IRA,
Roth IRA or
myRA .
No matter the retirement savings vehicle you choose, the most important step is to open an account.
Next, follow these three steps so your money can grow over time:
1. Contribute as much of your income as possible. Most experts
recommend setting aside 10% or more .
2. Automate your contributions .
Have your employer do a payroll deduction or have your money taken out
of your checking account and sent straight to your retirement account.
After all, you can't spend money you never see.
3. Get in the habit of upping your savings consistently,
either every six months, at the end of each year or whenever you get a
raise. Again, if you make this automatic by setting up "auto-increase,"
you won't forget to up your contributions (or talk yourself out of
setting aside a larger chunk).
What to Do if You Haven't Saved for Retirements by Age 50
Fifty may be the new 40, but when it comes to your retirement age, most people don't think 77 is the new 67.
Those of you who are aged 50 or older
have probably been working for a few decades, and you may be thinking
about what comes next. Most of us dream of eventually leaving the
workforce for good -- but what if you haven't even started saving for
retirement yet?
First off, know you're not alone. In fact, a recent GOBankingrates.com survey
found that 28% of people over age 55 have no retirement savings at all,
while 26% report that they have under $50,000 saved for retirement. But
with retirement fast approaching, there are still some moves you can
make to get closer to achieving financial independence. Here are a few
ideas to get you started.
IMAGE SOURCE: GETTY IMAGES.
Work longer
If you're in your 50s and still haven't put anything away for your
golden years, you should consider working until at least your Social
Security full retirement age --
the age at which you can receive the full Social Security benefit
you're entitled to based on your work history. The later you retire, the
longer you can live on earned income and build up your savings, rather
than drawing those savings down in order to get by.
Over the next 10 to 15 years, you'll need to turbocharge your
savings. Generally, a savings rate of 15% of gross annual salary is
recommended for people who have decades to prepare for retirement. But
if you're in your 50s and haven't really been saving, then you need to
dig as deep as possible. Ideally, you'll save 30% or more of your salary
in order to get your savings on track to meet your needs in retirement.
If you're unable to save that much, then try to start at 15% and look
for ways to make small increases over time. For example, every time you
get a raise, put it directly toward your savings contributions.
Take advantage of catch-up contributions
Now that you know how much you should be saving, let's address where
you should be saving. Tax-sheltered retirement accounts can offer you
current and future tax benefits. If you have an employer-sponsored
401(k) or 403(b), you can contribute up to $18,000 this year, plus a
$6,000 catch-up contribution if you're aged 50 or older, for a total of
$24,000. If you can max out your retirement account and possibly earn an
employer match, then you'll make up for some lost time.
If you don't have a workplace retirement plan, then you can save up
to $5,500 per year, plus an additional $1,000 if you're aged 50 or over,
in an IRA.
If you're in a position to do so, make sure you reach to get these
catch-up contributions in order to bridge the gap between what you have
and what you need in savings. In fact, saving the full $6,500 for the
next 15 years in an account earning 5% would yield a nest egg of about
$150,000.
Look to sources of guaranteed income
Social Security was never intended to be your only source of
retirement income -- or even the primary source. But if you haven't
amassed sufficient personal savings, then you will need to run the
numbers to determine how you can maximize your Social Security benefit
in order to help you make ends meet in retirement. Go to the Social
Security Administration's website,
set up an account, and take a look at your expected Social Security
benefit. Consider how much your check will continue to increase each
year you delay filing for benefits. For each year you delay filing, your
Social Security check will increase by about 8% until age 70, when your
benefits will max out.
Meanwhile, if you reach retirement with a smaller nest egg, you might
consider annuitizing a portion of your savings to provide a guaranteed
stream of income. To learn more about how you can achieve this, see this article.
If you're 50 or older and nowhere close to being retirement-ready,
then you need to start thinking seriously about how to build the savings
you'll need to have a happy and secure retirement -- and you may
ultimately need to adjust your idea of what your retirement will look
like. While this may be your last chance to move the needle in the right
direction, the good news is that if you commit to changing your
situation, there is still time to make some progress toward retiring in
comfort.
She told me she was using all the same appliances, as usual: "I have
three small children. I constantly have my washing machine, vac
cleaner, and the cooking top going on. We used to spend huge money on
electricity bills. So, in secret from my husband, I decided to buy an
energy saver. I installed it myself, it’s very easy and safe. Mind you, I
don’t know anything about electricity. 
What I saw was that after connecting the saver, the electric power consumption was cut by two! 
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