It's extremely important to have savings for retirement. And the sooner you start working on building yours, the better.
Social Security will only replace about 40% of your preretirement income if you're an average earner. And with benefit cuts on the table, it might become an even less dependable income source down the line. Funding your nest egg aggressively could help make up for that.
But many working Americans today are not, in fact, putting money into a retirement savings plan regularly. And so it's not surprising to learn that many seniors today think the country as a whole has a serious problem.
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Too many workers are setting themselves up for financial struggles
In a recent survey by the American Advisors Group, 89% of seniors feel that the country is undergoing a retirement savings crisis. Worse yet, 43% of seniors rate the condition of their personal retirement savings as fair or poor.
Now, to be fair, seniors today are at a bit of a disadvantage on the savings front. The reason? They started their careers at a time when pensions were still quite commonplace. As such, the idea of having to take retirement savings into one's own hands was novel, and many may have delayed their savings efforts, not realizing how essential building a nest egg would be.
Today's workers have much more of a heads-up in this regard. After all, many companies today do not offer a pension, and workers are taught early on that saving for retirement is something they need to do completely on their own.
Granted, some workers may have a degree of support from their employers when it comes to saving. That's because lots of companies do offer a 401(k) plan, and many even offer a matching incentive that workers who contribute can capitalize on.
But for the most part, saving for retirement is something the typical worker must do on their own. And it's important to prioritize your savings if you want to avoid financial worries once your career comes to an end.
Small contributions can go a long way
The idea of building up a retirement nest egg may seem daunting. But even if you're only able to save a small portion of your paycheck, it could still do a lot for you over time.
Let's imagine you're able to sock away $300 a month over a 35-year period. That could mean not even starting to save until you've been in the workforce for five years or more.
If your savings generate an average annual 8% return, which is a bit below the stock market's average and a reasonable assumption for a savings window that lengthy, it means you'll be sitting on a nest egg worth around $620,000. Make it $400 a month, and you're looking at around $827,000. And if you can push for $500 a month, you'll set the stage for a $1 million savings balance.
Don't take chances with your retirement
Unfortunately, 43% of seniors today feel they haven't saved enough money to retire comfortably. If you want to avoid financial worries later in life, make every effort to build up a solid nest egg while you can -- and prioritize your retirement savings as early on in your career as you can.
