Throughout the U.S., many people have far too little retirement savings to support themselves after they stop getting paychecks.
There are some common reasons why so many workers are unable to save for their later years. In fact, more than 9 in 10 people responding to a recent Goldman Sachs survey identified the same key issue that’s interfering with their efforts to invest for their future.
This is the biggest obstacle standing in the way of retirement savings
According to Goldman Sachs, 93.3% of current workers indicate that too many financial expenses stand in the way of retirement savings.
This was the top-cited reason for a struggle to save, above financial hardships such as home repairs, credit card debt, or paying down existing loans.
Retirement savings can’t wait
Having too many pressing financial expenses at the moment can push retirement savings off of your priority list — especially if you’re many years away from leaving the working world behind.
Unfortunately, the sad reality is that you’re going to need to have a nest egg to supplement Social Security, which can only replace about 40% of pre-retirement income — rather than single-handedly providing the 80% to 90% of pre-retirement funds that you’ll need to make ends meet.
And while you may feel like you have plenty of time to save for retirement in the future, the longer you put off investing, the harder it will be to actually acquire the requisite nest egg. That’s because you lose out on the opportunity to have your invested funds earning returns that can then be reinvested to earn more money for you without any effort on your part.
While you may only have to save a few hundred dollars per month to hit your savings target if you start in your 20s or 30s, you’ll likely need to save thousands per month if you wait until late in life to begin investing. That means waiting to start investing can just create more financial problems for you later.
Here’s how you can overcome this big obstacle
The good news is, there are steps you can take to help you invest for retirement now, even if you are among the majority of people who feel like you have too many current expenses to make this possible. Some of the key steps to take include:
- Tracking spending: By monitoring your spending for around 30 days, you can get an idea of where you’re taking on unnecessary financial obligations and what cuts you can make to prioritize retirement investing.
- Prioritizing saving in your budget: If you create a budget to live on and make retirement savings an essential bill you must pay, you can work your other spending around retirement investing rather than saving what’s left over.
- Taking advantage of free money for retirement investing: Tax deductions for investing in retirement accounts, employer matching contributions, and the Saver’s Credit can all make it easier for you to find the money to invest.
By taking these three steps, hopefully you can find a way to save despite your current financial obligations so you can set yourself up for a secure future.
Christy Bieber | The Motley Fool