Whatever generation you are in, this is one of the most challenging times to be saving for retirement. Boomers, Gen-Xers and Millennials alike have struggled to sock away money due to the recession, rising costs of living, falling pensions, and most recently, the pandemic.
The retirement crisis facing us now will be cross-generational. It is likely that a large percentage of the population will need to continue working well into their 60s or beyond.
Thankfully, amid these challenges, enterprising companies like ScoutVisor are finding ways to help everyday Americans to achieve their retirement goals.
Will Social Security Be There for Retirees?
Many would-be retirees are racing toward an uncertain future where even traditional sources of retirement income may be under-funded.
The Social Security Administration itself reports, “As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.”
Does that mean Social Security is going away? Not necessarily. Even if the status quo is maintained, the administration says, “At the time of depletion of these combined reserves, continuing income to the combined trust funds would be sufficient to pay 80 percent of scheduled benefits.”
Additionally, there are ways that lawmakers can keep social security from being depleted. The SSA adds, “Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall.”
AARP elaborates on these options, explaining, “For years, lawmakers and policy experts have been debating proposals to shore up Social Security’s finances, most falling into two broad categories: changing tax policies to steer more money into the trust funds or tinkering with the benefit formula to reduce costs (or some combination of both).”
Will policymakers make a decision on time to ensure that the full expected benefits will be there in 2037 and beyond? Hardworking Americans today have no way of knowing.
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How Much Would Millennials Need to Save to Be Able to Retire?
Many of today’s more financially secure Boomers are not aware of just how few Millennials can afford to ever retire. They struggle to understand why today’s younger workers are having a hard time making ends meet.
Not only that, but a lot of news stories focus on the fact that Millennial workers are saving for retirement earlier than their Gen X or Boomer counterparts did. But that does not mean that they are saving enough.
According to the National Institute on Retirement Security, 95% of Millennials are not saving enough money for retirement.
Additionally, the institute reports, “More specifically, the analysis finds that 66 percent of working Millennials have nothing saved for retirement, and the situation is far worse for working Millennial Latinos. Some 83 percent of Latinos in this generation have nothing saved for retirement.”
For a lot of Millennials, the issue comes down to retirement plan eligibility requirements. The institute says, “Four out of ten (40.2%) of Millennials cited eligibility requirements set by employers, such as working a minimum number of hours or having a minimum tenure on the job, as a reason for not participating in a plan.”
Some Millennials Are Getting Ahead
Does that mean all hope is lost? Despite the bleak figures above, no. There are also statistics that indicate that a significant percentage of Millennials may have a shot at a comfortable retirement.
Bank of America reports, “We found that nearly one in four millennials that are saving have at least $100,000, up from 16 percent in 2018 and 8 percent in 2015.”
To clarify on what that means, the bank also states, “Three quarters [of Millennials] are saving for retirement.”
The bank also notes that many young workers carry quite a bit of debt. Indeed, 16% of Millennials owe at least $50,000.
So, that is another factor that is making it difficult to save for retirement.
You may remember a time when it was recommended that one try to save around 10% of one’s paycheck in order to retire.
In recent times, that number has jumped to 15%. But it may still not be nearly sufficient.
CNBC states, “Millennials should aim to set aside nearly half of their income for the future, according to Olivia S. Mitchell, professor of insurance/risk management and business economics & public policy, and executive director of Wharton’s Pension Research Council at the University of Pennsylvania. If you want to live off even half of your final salary in retirement, you need to save 40% of your income over the next 30 years, she says.”
CNBC points out another challenge as well, saying, “Just over a third of Americans are forced into retirement sooner than they’d planned, many because of health setbacks.”
The bottom line is that saving for retirement is difficult these days, but vitally important. Whatever your age and income, you need to be doing your absolute best to save as much as you can.
ScoutVisor is Helping More Americans Save for Retirement
Another reason many people have a hard time saving for retirement is that they simply do not know where to start.
They may be well aware of the challenges they face, but not the opportunities that are available to them to put more money aside for retirement.
ScoutVisor is a company that is developing simple but powerful ways to help more Americans save.
The company has created a two-minute survey that matches Millennials and others who are saving for retirement with real financial advisors.
Unlike robo-advisors, these are real human advisors who can provide personalized advice. The system ensures that investors saving toward their futures work with advisors who specifically understand their goals, obstacles and opportunities.
Sometimes all it takes is a point in the right direction to start making strides toward your goals. To take the ScoutVisor free two-minute survey and the next step toward your retirement goals, click here.