A recent article in U.S. News and World Report discussed the most common excuses Americans refer to when discussing the pessimistic outlook of their retirement savings. In spite of these excuses, the article also offered advice to avoid relying on them.
The most common excuse cited its the low amount most Americans earn. While this might be true for a significant number, the article states that any small amount saved is helpful. "If you take just $10 a month and then increase it to $20 a month after six months, you probably won't miss it," said one expert. Contributing these small amounts to retirement plans, such as 401(k)s or IRAs will also quickly build in time.
Another commonly cited excuse was college savings, as many Americans plan to save for their child's higher learning before saving for retirement. However, one expert aruging against this stated "children can borrow to go to college, but you can't borrow to retire." Having larger retirement savings can put Americans in a better position to help their children pay off loans later in life, if need be.
Many Americans also believe retirement is far away, and thus, do not begin saving until much later. However, the article explains that saving $2,500 in a 401(k) beginning at age 25 will result in more than $517,000 in savings by age 65. By comparison, beginning to save at age 40 requires $7,900 a year to reach the same amount by 65.
A recent report found that only 24 percent of Americans are comfortable with their retirement savings. Following many of the aforementioned steps might succeed in increasing this figure.