The economy is surging, more people have jobs, and wages are growing. And yet, many are still not putting enough of it away for the future. According to a new Northwestern Mutual study, nearly a third of Americans have less than $5,000 saved for retirement, including 21 percent who have nothing saved at all. Overall, the survey finds the average American's retirement savings is about $85,000, while most experts recommend having at least a million dollars stocked away by retirement age.
The lack of retirement savings across the country is a growing problem, according to Greg McBride, chief financial analyst at BankRate.com. "Most people still aren't saving anywhere near what they need to be saving, whether it's for emergencies or retirement," he tells KTRH. Recent studies back that up, showing Americans are spending faster than we're saving.
The issue is also generational, according to McBride. He notes that much of the current workforce grew up in the era of the retirement pension. "Today's employees don't have pensions anywhere near to the extent that previous generations did, so the burden is more and more on our own shoulders to save for our own retirement," says McBride.
To that end, he recommends starting a retirement fund, whether through a 401(k) or IRA, as early as possible, and paying close attention to how much you are contributing to it. "And the more you can work to increase those contributions each year, that goes a long way," says McBride. "The power of compounding really works its magic over long periods of time, so procrastination really hurts your financial security later in life...get to 10 percent (of your income) right away, and then once you get to 10 percent, then work to increase that up until you get to that 15 percent mark."