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Why Americans Fail to Save for Retirement, and What You Can Do About It

Americans are simply not saving enough for retirement. In fact, many Americans may face retirement with little to nothing in savings.

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Why Americans Fail to Save for Retirement, and What You Can Do About It

Why Americans Fail to Save for Retirement, and What You Can Do About It

You’ve heard it for years. Americans are simply not saving enough for retirement. In fact, many Americans may face retirement with little to nothing in savings. According to a 2018 survey by Bankrate, 20 percent of Americans are not contributing anything to their savings, despite low unemployment, a growing economy and rising wages.1

Reasons or Excuses?

Bankrate’s survey pointed to a number of reasons for why individuals are not saving enough, including:2

  • Current expenses, which was cited by 39 percent of respondents
  • Sixteen percent identified their “job isn’t good enough,” while an equal number said that they “haven’t gotten to it”
  • Another 13 percent said that debt restrained their savings
  • Six percent actually said they “don’t need to save more” … presumably these individuals are expecting a nice inheritance or counting on winning the lottery!

There is no question that even in the midst of sustained economic growth, a number of Americans still struggle financially. The high cost of urban living or elevated levels of student debt are real obstacles to gaining future financial security. That said, there are avenues for helping your clients—or their adult children—get on track toward achieving a financially secure retirement.

Steps to Take

  1. Stop the Procrastination. When planning for tomorrow, too many Americans find it easier to put it off until tomorrow … until it becomes too late. Procrastinators must take their first step today, no matter how modest.
  2. Automate Saving. Whether through an employer’s 401(k) or an automatic investment program of monthly checking account withdrawals, paying the “savings bill” first is the most effective way to begin building wealth for the future.
  3. Tame the Spending. Review the above reasons Americans cite for not saving enough and most of them can be tied to how they spend their money. From buying or leasing a new car to $40 morning coffees, most Americans can find ways, big and small, to find cash to fund debt reduction and add to savings.
  4. Create a Plan. This is what advisors do best. Helping individuals craft a long-term plan that incorporates budgeting, debt elimination, and a savings and investment blueprint is a critical starting point for placing individuals on the path to financial success.

As an investment professional, you are in a unique position to provide the motivation and discipline many individuals need to conquer the fears and uncertainty that lie at the heart of Americans’ inaction on taking control of their financial futures. Good luck!

Sources:

  1. https://www.bankrate.com/banking/savings/financial-security-0318/
  2. https://www.bankrate.com/banking/savings/financial-security-0318/

See referenced disclosure (2) at http://blog.americanportfolios.com/disclosures/ 

About The Author

Shauna Faulkner

 

Marketing Communications Manager 
631.439.4600, ext. 224 

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