It’s no wonder one in three Americans believe they have a better chance of learning the mythical creature Chewbacca is real than retiring comfortably, given their current dearth of savings and retirement planning. Many simply aren’t saving anything and have no plan to start in 2019.
Fewer than half (47%) of working Americans in their 40s and 50s with household incomes from $40,000 to $99,999 said retirement was one of their top three savings priorities for 2019, according to a new AARP-Ad Council survey. Just 21 percent said saving for retirement is their top priority for the new year.
Instead of building ample retirement savings, some 33 percent of Americans said paying off debt is their top 2019 savings priority, causing planning for the long-term to slip down the list of priorities, AARP researcher S. Kathi Brown said.
More than one-third of Americans said they plan to focus on immediate financial demands like paying down student loans, credit card bills, and mortgages, the survey found.
It’s no secret that middle-age Americans should be planning for retirement, and roughly seven in ten (69%) did contribute something to retirement savings in 2018.
The survey showed that when people made a commitment to putting some money towards retirement last year, they overwhelmingly followed through. However, only 40 percent of respondents set a goal. Of the 60 percent who didn’t set a retirement savings goal, a concerning 40 percent saved nothing for retirement.
Among those who set a retirement savings goal in 2018, 84 percent saved at least some money for retirement. Alarmingly, however, just 7 in 10 Americans (68%) approaching retirement have less than a year’s income saved for retirement, according to the National Institute on Retirement Security.
The 40% of Americans who did set a goal for retirement used the following strategies to build their savings in 2018:
- Increased contributions to employer-sponsored retirement plans to get the full company match (27%);
- Put extra income--including raises and bonuses--directly into retirement savings accounts (18%);
- Cut back on everyday expenses and spending (17%)
To encourage more Americans to plan, AARP and the Ad Council have launched a series of PSAs directing people to their AceYourRetirement.org website, which provides people with a free digital retirement planner who helps them generate a personalized retirement action plan.
“Since its launch 18 months ago, visitors to the www.AceYourRetirement.org website have numbered in the hundreds of thousands. More than 189,000 people have used the site to generate a personalized retirement savings action plan,” AARP spokesman Mark Bagley told Financial Advisor Magazine.