People are lagging behind on retirement financial savings. That is the way you get on the observe

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Most Americans are unprepared for retirement.

While most adults who are not retired have some sort of nest egg, only 36% think their retirement savings are on the right track, according to the Federal Reserve.

A separate survey by the Insured Retirement Institute found that most workers do not have adequate retirement plans and do not have enough reserve to catch up.

It’s a problem that existed before the recession caused by Covid. For some, the pandemic exacerbated the problem. A third of Americans who were planning to retire say it will now happen later due to Covid, and about 14 million have left their retirement accounts with no monthly contributions as of March this year, according to a study by Age Wave and Edward Jones.

Still others had the opportunity to put more money aside thanks to the forced spending cuts.

In fact, low-wage workers, many of whom don’t even have access to retirement plans, are the hardest hit by layoffs, said Anqi Chen, assistant director of austerity research at the Center for Retirement Research at Boston College. They too are left behind in recovery.

“About half of workers in the past 40 years or so have never participated in a retirement account,” she said.

Still, saving for retirement is one of the most important things you can do. This is how you get on the track.

Start early and be consistent …

The best place to start saving for retirement early is when you are young because your savings have compound interest.

Also, be consistent with your posts.

For example, at the age of 18, if you opened a Roth individual retirement account, deposited $ 100 per month for the next 40 years, and assumed an average annual return of 12%, you would get $ 1 million, according to Personal Finance expert Suze Orman. If you wait 10 years to get started, the end result would be $ 300,000 by the age of 58.

…. But it’s not too late

Unless you started saving at a young age or had to stop putting money aside during a time of financial stress, don’t be discouraged, said certified financial planner Abbey Henderson, CEO of Concord, Massachusetts-based Abaris Financial Group .

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“My fear is that people will think, ‘I’m behind. I will never make it up so I won’t try,'” said Henderson.

“Every little bit helps,” she said. “Take baby steps.”

So, even if it’s only $ 25 a week, do this. Once you are comfortable and can go higher, do this.

Have the right asset allocation

Have the right mix of assets in your portfolio based on your risk tolerance. Stocks, for example, are riskier than bonds, but they bring higher returns. When you are younger, you can take on greater risk as your portfolio has time to make up for losses.

It’s important to choose an asset allocation that allows you to sleep at night so you don’t panic if the market falls, Henderson said.

It’s really important to have an idea of ​​what retirement is really going to be like because that’s a lot more motivating.

Henderson Abbey

CEO of the Abaris Financial Group

Steve Parrish, co-director of the New York Life Center for Retirement Income, also suggests considering pensions as part of your overall retirement strategy since many companies are no longer offering pensions. Annuities offer a guaranteed income in retirement.

Don’t get caught up in the last number

Workers in the United States believe it takes an average of $ 500,000 to feel financially secure in retirement, according to a recent survey by the Transamerica Center for Retirement Studies.

However, the final number will depend a lot on your specific situation, such as your income and cost of living.

Instead, remember to save 15% or 20% of your income on a variety of vehicles, such as: B. a 401 (k) plan, a savings account, and a 529 college savings plan. That 20% can also include any employer match you get in your 401 (k).

“So many things can change between now and retirement,” said Henderson. “You can drive yourself crazy trying to target a certain number in your 20s and 30s.”

Consider partial retirement

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Instead of retiring, reduce your working hours to part time.

“People are starting to say that it may be a slower process and eventually a full retirement,” said Parrish, who pointed out that people are now living longer.

This also allows you to postpone social security for as long as possible so that the benefit is higher when you move in.

Just look at your benefits. If you get off too much, you can lose your health insurance. Medicare doesn’t start until the age of 65.

Don’t forget about inflation

Don’t fall into the trap of not factoring inflation into your retirement plans, Henderson said.

Get enough diversification in your portfolio, including maybe some real estate, inflation-adjusted treasuries, or commodities, and stick with your program, she advised.

Also, remember that social security is your best inflation hedge, Parrish pointed out. A current estimate puts the adjustment in the cost of living for 2022 at 6.1%.

Of course, depending on your age, there are concerns about the program itself. Recent projections show that the fund will only be able to pay out full benefits as planned until 2033.

Imagine your life in retirement

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