Investors with quite a bit of money saved are still not feeling very confident about their retirement prospects.
That's according to a recent study conducted by Natixis Investment Managers, which showed that 40% of respondents indicated it would take a miracle in order for them to retire. And this was a survey of people who have at least $100,000 in investable assets, which is more than many of their peers have.
Are these worried workers right? Will typical retirees need a miracle to be able to leave the workforce with a nest egg that can support them during their later years?
Retiring with financial security is possible -- no miracles required
Many of the investors responding to the survey were being overly pessimistic about their retirement prospects. Still, many people are worried about being able to make ends meet once their paychecks stop coming in.
The reality is, saving a retirement nest egg that offers plenty of financial security is within reach of just about everyone, especially if they start early enough -- or are willing to make the sacrifices needed to build up their account balances if they get a late start with investing.
What's needed isn't a miracle. Instead, it takes the following:
- A detailed estimate of how much you need to save for retirement: There are a few ways to set investment goals, but one of the easiest is to assume you'll need 10 times your final annual salary.
- A breakdown of your big goal into smaller monthly goals: Breaking down a big goal into monthly or even weekly amounts lets you know how much to invest each month and helps you make sure you're on track. Investor.gov's calculators make determining your monthly savings target easy if you know what size nest egg you'll ultimately need.
- A budget that prioritizes saving: Once you have that monthly savings amount, treat it like your rent or mortgage and other bills, making it a top priority in your budget. Build other spending around that goal, rather than treating saving as an afterthought.
- Automatic transfers into your retirement account: Have that monthly sum automatically invested in your 401(k) or other tax-advantaged retirement plan. This makes saving effortless.
- A solid investment strategy: Finally, build a diversified portfolio with a good mix of assets appropriate to your age. You can invest in ETFs if you are confused about how to pick individual stocks or don't want to spend a lot of time researching different assets to buy.
Whether you're a high earner with a lot of money saved already or are just getting started investing, if you take all these steps, you should be able to retire at a reasonable age with a generous nest egg -- even if no miracles occur.