| (ARA) - Thought about your retirement lately? If you
haven’t, you’re not alone. According to a recent survey of 1,000
American adults, nearly two out of three (62 percent) non-retired
adults have never estimated how much money they would need for their
retirement years.
“Financial ignorance never serves people well,” says Todd
Gillingham, a partner with Thrivent Financial, a Fortune 500 financial
services organization. “Estimating how much you need to accumulate for
your retirement years is a critical first step in achieving a
comfortable future.”
So how much do you really need to save for retirement? A few
hundred thousand dollars? A million? More? Not surprisingly, the
answer varies depending on one’s age, health, marital status, income,
assets, preferred lifestyle and dreams, among others, according to
Gillingham. But regardless of whether an individual is five months or
five decades from retirement, delay in planning for retirement can be
costly.
“As a general rule, people are retiring earlier and living longer,”
says Gillingham. “In addition, eligibility for full Social Security
benefits is creeping upward, making it necessary that individuals plan
carefully and set aside more money for their retirement years than
they might expect.”
Unfortunately, most Americans aren’t acting on that message. More
than half (52 percent) of non-retired, working Americans have either
not started saving for retirement or have saved less than $10,000 for
their long-term retirement needs, and just 10 percent say they have
personally saved more than $100,000, according to the survey. This,
despite the fact that it may be necessary for many Americans to save
more than $1 million to fund a comfortable retirement.
Why don’t Americans simply save more? For most, it’s a matter of
“not having enough.” The Thrivent Financial survey found that among
those who haven’t started saving for retirement, 54 percent simply say
they don’t have enough money, 21 percent say it is too early and 17
percent say they haven’t’ gotten around to it yet. Just 3 percent say
they don’t think they need to save for retirement.
However, according to Gillingham, lack of money is not the true
stumbling block that keeps people from achieving their financial
goals. “A lack of money most often reflects individuals’ commitments
to short-term priorities that keep them from addressing their
long-term financial needs,” said Gillingham.
Fortunately, nearly half (49 percent) of working Americans say they
began saving for retirement by age 35. Still, that means most working
Americans are pushing retirement accumulation to the mid- to late
stages of their working careers. Why does this matter? As a
hypothetical example, a 20-year-old who invests $80 monthly in an
investment vehicle earning a constant 10 percent rate of return
(compounded monthly) will accumulate more than $1 million ($1,025,535)
at his or her retirement some 47 years later. By contrast, a
45-year-old who invests $1,000 monthly in that same vehicle will
accumulate just $953,173 by retirement, a difference of more than
$72,000. Time is on the side of the steady, systematic investor.
“Retirement is a need that simply cannot wait,” notes Gillingham.
“Time is an individual’s most valuable ally in achieving his or her
retirement goals.”
A financial professional can help individuals identify personal
retirement goals and put strategies in place to achieve those goals.
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