1 in 5 adults ages 50+ have no retirement savings, and more than half are worried they will not have enough money to support them in retirement, according to a new AARP survey.
The study reflects concerns amid a shaky economy, high prices and an uncertain future.
“Every adult in America deserves to retire with dignity and financial security. Yet far too many people lack access to retirement savings options. This, coupled with higher prices, is making it increasingly hard for people to choose when to retire,” said Indira Venkateswaran, AARP Senior Vice President of Research. “Everyday expenses continue to be the top barrier to saving more for retirement, and some older Americans say that they never expect to retire.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The study also looked at savings and financial security in terms of gender, with 42% of men describing their financial situation as “fair” or “poor,” as opposed to 34% at the beginning of 2022. Roughly 40% of men who regularly save for retirement believe they are saving enough, compared to just 30% of women.
What happens if you carry debt?
Despite the recent slowing of inflation, higher prices over the past couple of years has had lingering consequences for debt and savings. Although the share of adults age 30-plus carrying debt remains stable at 80%, overall, the amount of debt adults are carrying is higher. The average amount of credit card debt carried over month-to-month increased to $8,169 in January 2024 from $7,538 in January 2023.
Nearly one-third (30%) of older adults who carry over a credit card balance from month-to-month report carrying a balance of $10K or more, while 12% described their balance as $20K or more, up from 8% roughly a year ago.
How do economic factors impact a sense of financial security?
Despite one-third of older adults carrying over credit card balances from month-to-month, 33% of respondents ages 50+ believe their finances will be better 12 months from now. Even so, the lingering effects of inflation and high costs are still apparent:
- 70% of older adults worry about prices rising faster than their income
- 37% worry about covering basic expenses, such as food and housing
- 26% worry about covering family caregiving costs
- 26% say they expect to never retire
And yet, Americans are 15 times more likely to save for retirement when they have access to a workplace plan. Yet, nearly 57 million people do not have access to a retirement plan at work.
What is Congress doing to help retirees?
Congress is currently considering legislation that would expand retirement security, including the bipartisan Retirement Savings for Americans Act of 2023, which would provide retirement savings accounts to eligible workers without employer-sponsored retirement plans and the Automatic IRA Act of 2024.
“America is facing a serious retirement crisis, and Congress must act more swiftly to provide the financial support older Americans need and deserve,” said Nancy LeaMond, AARP Executive Vice President and Chief Advocacy & Engagement Officer.
To view the full Financial Security Trends Survey and methodology, visit aarp.org/financialtrends.
How to start saving now
If you’re living paycheck to paycheck, it can be hard to save. That said, these six steps can take you from zero to hero without sacrificing your lifestyle too much.
1. Pay off high-interest credit card debt
High debt, including credit card debt, can deplete your monthly income and make saving seem impossible. But paying down higher-interest debt can save you thousands in interest payments over time. Although student loans, car loans and other personal debt can weigh heavy, paying down or paying off the debt (like credit cards) with the highest interest can help pave the way to saving sooner.
2. Cut unnecessary spending and budget for savings
Cutting back on unnecessary expenditures, such as eating out, adding new streaming services and having the newest and greatest technology, may not be as fun as having it all, but understanding where and how you spend can help you budget and add to your savings.
Add a line item in your budget for savings. For a simpler approach, try the 50/30/20 method.
This is how it works:
- Put 50% of your monthly income toward necessary expenses, such as your housing payment and grocery bills.
- Put 30% towards your wants, also known as discretionary purchases.
- Put 20% towards debt payoff and savings.
3. Automate your savings
One of the easiest ways to save is to automate your savings. Rather than storing your money in an account where it’s easy to spend, set up automatic withdrawals from your paycheck to deposit into your savings. Psychologically, if you don’t see the money, you won’t miss it. But, you will save it.
Plus, deposit any unexpected windfalls, such as work bonuses, tax refunds or family gifts, into your savings instead of into a checking account where the money is easily accessible. Automatic deposits can accelerate your progress toward your savings goals.
4. Ask about a high-yield savings account
High-yield savings accounts from banks and credit unions have higher APYs — some over 5% — than regular savings accounts, which often pay less than 1%. Although some high-yield accounts require a minimum deposit or maintaining a certain balance, many do not. Plus, most high-yield accounts don’t charge monthly fees.
5. Take advantage of 401(k) matching
If you’re working and your employer offers 401(k) plans and you’re not taking advantage of it, you’re missing out. This is especially true if your employer provides matching, which means they match a certain percentage of your contribution each month up to a certain percentage of your salary.
6. Start a side hustle
Today, more and more people are taking on side hustles, such as driving for a rideshare, blogging, doing odd jobs around the neighborhood, taking online surveys, reviewing products and more. Yes, a side hustle eats into your time, but in the long run, it can help you put more money toward your savings and still give you a bit of extra cash to spend on yourself.
Related Content
-
Think Twice Before Getting a Credit Card Cash AdvanceA credit card cash advance can be a quick solution when you need emergency help with money. But you'll pay for the convenience with high interest and fees.
-
What is AI Worth to the Economy?The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
The Rule of Two Lives in RetirementThe 'rule of two lives in retirement' means accounting for your partner at every decision point, because one life becomes two.
-
Retire in This Asian Country for a Warm Culture and Relaxed LifestyleWith its fabulous beaches, delicious food, and affordability, this Southeast Asian country is a haven for expats from around the world.
-
I'm a Financial Adviser: Three Things You Will Wish You Did Before the Fed Cuts Interest RatesWith potential interest rate cuts on the horizon, you might want to lock in today's higher yields and consider adjusting your asset allocation.
-
Get the Best Car Deal in Retirement: Here's the TrickPlanning on shopping for a new car this Labor Day weekend? Here’s how to haggle for a better price, even though you are retired.
-
Want to Visit Your Favorite National Parks in Retirement? Here's How.Exploring the breathtaking landscapes and diverse wildlife of America's National Parks offers retirees an adventurous way to soak in epic scenery and keep things exciting.
-
Average 401(k) Fund Fees and Expenses: Are You Overpaying?Average 401(k) fund fees and administrative expenses are, in some cases, shockingly high. But don't be misled by gloomy headlines. Here's the skinny.
-
Three Pros (and Four Cons) of Hiring Multiple Financial Advisers: The View From a Financial AdviserThere's nothing to stop you from working with several financial advisers instead of just one. But take a balanced view of the risks and rewards first.
-
How to Keep Your Work Friends After You RetireWork friendships can boost teamwork, lift your spirits, and make the job more fun. But when you retire, these friendships can fade. Here's a look at why that happens and what you can do about it.
