Retirement planning is a daunting task for many workers, especially in the wake of the pandemic and economic uncertainty. How much money do you need to retire comfortably and enjoy your golden years? A recent survey by Charles Schwab revealed that workers in the U.S. have a target of $1.8 million on average for their retirement savings.
The Retirement Savings Gap
The survey, which polled 1,000 workers aged 21 to 75, found that only 18% of them are confident that they will achieve their retirement savings goal. The majority (62%) said they are somewhat confident, while 20% said they are not confident at all.
The survey also revealed a gap between workers’ expectations and reality. The average retirement savings of the respondents was $920,000, which is less than half of their target. Moreover, only 39% of them have a written financial plan, and 43% said they don’t know how much income they will need in retirement.
The survey results suggest that many workers are not prepared for retirement and may face financial challenges in the future. According to Schwab, the ideal retirement savings rate is 15% or more of one’s income, but the survey found that the average rate was only 10%.
The Factors Affecting Retirement Savings
The survey also asked workers about the factors that affect their retirement savings. The top three factors were:
- Cost of living (38%)
- Unexpected expenses (34%)
- Current income level (32%)
Other factors included debt, health care costs, supporting family members, market volatility, inflation, taxes, and social security.
The survey also found that workers have different priorities for their retirement spending. The top three categories were:
- Travel (38%)
- Spending time with family and friends (36%)
- Pursuing hobbies (30%)
Other categories included volunteering, working part-time, going back to school, starting a business, and relocating.
The Tips for Saving More for Retirement
Schwab offered some tips for workers who want to save more for retirement and achieve their goals. Some of the tips are:
- Start saving early and take advantage of compound interest
- Increase your savings rate gradually and whenever you get a raise or bonus
- Contribute enough to your employer-sponsored retirement plan to get the full match
- Diversify your portfolio and adjust your asset allocation according to your risk tolerance and time horizon
- Review your financial plan regularly and make changes as needed
- Seek professional advice from a financial planner or advisor
Saving enough for retirement may seem impossible for some workers, but with proper planning and discipline, it can be done. By setting a realistic goal, tracking your progress, and following some best practices, you can secure your financial future and enjoy your retirement.
