On Tuesday we learned that too many Americans still have no savings, and a study by Credit Suisse similarly estimated that roughly one in four U.S. adults have a negative net worth. This lack of a meaningful financial backstop leaves people dangerously unprepared for both near- and long-term money challenges. Unsurprisingly, a poll conducted by Country Financial found that financial fears keep more than eight in ten Americans awake at night. Further, 30 percent of surveyed U.S. adults said that their biggest money-related concern is being able to retire comfortably, followed by healthcare expenses (19 percent) and shelter costs (11 percent).
Those financial fears were reported by Americans across all age groups, although respondents age 65 and older were noticeably more worried about rising healthcare expenses. As for Millennials, concerns about old-age financial security are becoming more common due to the growing uncertainty about the long-term sustainability of Social Security and the increasing importance of retirement self-funding. Such issues may even force many Gen-Y adults to work well past the traditional retirement age. In fact, a report from Wells Fargo found that a majority of surveyed older Americans already plan on working until at least age 70 because of a lack of retirement savings, and a study from NerdWallet estimated that many Millennials will have to work until the age of 75 due to the added burden of significant student loan debt.
Perhaps the best way to avoid being in a financially precarious situation in old age is to start setting money aside for retirement as early as possible. Evidence of this can be seen in the above-mentioned Wells Fargo report, which found that working Americans between the ages of 55 and 59 who started saving for retirement at 31, on average, had already set aside three times as much as their 60-plus counterparts who on average did not begin saving until age 37. Clearly starting just a few years earlier can go a long way toward ensuring financial security during retirement. Encouragingly, data from the Transamerica Center for Retirement Studies showed that surveyed Millennials started saving for retirement at a median age of 22, much sooner than both Gen-X (27) and Baby Boomer (35) respondents.
Sources: Credit Suisse, Country Financial, EBN, CNBC, Wells Fargo, NerdWallet, TCRSPost author: Charles Couch