No matter how old you are, retirement is probably on your mind. This doesn't mean spending your workday dreaming of drinking Mai Tais on a cruise ship, though. Instead, like 64% of your fellow Americans, you're probably worried you won't have enough money to retire.
Unfortunately, you have good reason to worry. We're in the midst of a retirement crisis, and there's reason to believe things are going to get worse. There's also a lot of troubling data -- like the three worrisome numbers explained here -- suggesting average Americans are going to face a lot of financial struggle after leaving the workforce.
The good news is, while these numbers are scary, there are practical steps you can take to overcome your fears, end your retirement worries, and put yourself on the path to a secure retirement.
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1. Your first frightening number: 6.2%
One if the first key numbers to know -- 6.2% -- comes from the 2017 How America Saves report from Vanguard. This number is the percentage of income that eligible workers contributed to their 401(k)s in 2016. It's down from 6.9% the year prior.
Not only is the number moving in the wrong direction, but it's also way too low. Conventional wisdom says you should save at least 10% of income for retirement, but even this number is an underestimate.
To understand how much you're short-changing yourself, consider what happens if you save from age 30 to 65, earn 7% returns and save varying percentages of median household income, which the U.S. Census reported at around $59,000 as of 2016. .
| % of Income saved | Amount saved annually | Total Savings at 65 | Inflation adjusted savings |
| 6.20% | $3,658.00 | $505,670.00 | $174,131.00 |
| 6.90% | $4,071.00 | $562,762.00 | $193,791.00 |
| 10.00% | $5,900.00 | $815,597.00 | $280,857.00 |
| 15.00% | $8,850.00 | $1,220,000.00 | $421,286.00 |
| 20.00% | $11,800.00 | $1,630,000.00 | $561,715.00 |
Even the small decline in savings rates from 6.9% to 6.2% costs you almost $60,000 -- or $20,000 adjusted for inflation-- although any savings rate below about 15% of income won't provide a big enough nest egg to sustain you.
It's a daunting task to save this much of your income, but work up to saving more for retirement by allocating raises to retirement savings before getting used to the extra money, by cutting your budget and by considering creative ways to make extra income.
2. A second scary statistic: $1,386
This second number -- $1,386 -- is the reason why your nest egg is so important. It's the average monthly Social Security payment received by retirees as of 2017.
The $16,632 annual income you'd have from relying on average Social Security benefits alone -- not supplemented by savings -- would put you just $4,500 above the 2017 poverty level for a household of one. You wouldn't qualify for most benefits programs and would struggle to afford basic costs. Just medical care spending alone -- averaging $5,994 for seniors as of 2016 -- would take around 40% of your entire income.
And things are only getting worse. Social Security's purchasing power is eroding every year as Cost Of Living raises for Social Security recipients aren't keeping pace with rising food and healthcare prices.
The bottom line: you cannot live on Social Security alone -- so don't try. Automate your 401(k) contributions now so you'll have savings. Start with an automated withdrawal of the largest amount you're comfortable with. Once you get used to living on less, increase your contributions regularly until you're saving enough. If you don't have a 401(k) at work, an IRA also allows you to make tax-free contributions.
3. Is $17,000 the scariest number of them all?
The most frightening number -- and the one that should spur you into action -- is $17,000. This number is the median retirement savings for families aged 56 to 61 , according to a 2016 report by the Economic Policy Institute.
These families are very close to retirement with far too little savings to sustain them. For those nearing retirement with a small nest egg, working longer to delay Social Security benefits -- and thus receive larger payments -- may be necessary. Working longer also allows for more contributions to be made to 401(k) and IRA accounts, especially as both accounts allow catch-up contributions, raising annual contribution limits for those over 50.
If you're still young and looking at this number, it should serve as strong motivation to save more now so you're not scrambling later.
Let the statistics scare you into taking action
If these startling retirement statistics have given you an uncomfortable glimpse into what your future could be, that's a good thing. The key is to take your worries and fears and turn them into action.
Take a look at your budget right now to try to find areas you can cut to divert more into savings. Up your retirement contributions tomorrow by 1% -- you won't miss the money much if you start small. Look for a side gig or talk to your boss about a raise to boost your income so you can save more. Or, consider something drastic like getting rid of your car, renting out a room in your house or moving to a lower cost of living area.
Your future is in your hands. While it undeniably requires effort and sacrifice, taking action now means you can defy the statistics and actually look forward to a retirement spent sipping those Mai Tais without any money worries.
