Friday, February 6, 2015

Top Financial Fear for Americans Is Not Saving Enough for Retirement

Social Security doesn't provide enough money for a financially healthy retirement. And most people no longer can rely upon their employer to make up that shortfall. This is especially true in the private sector as the 401(k) plan has essentially replaced the previously guaranteed pension plan benefit. This trend toward personal responsibility for achieving a satisfactory retirement income is on its way to public sector employees as well.

{NOTE: But providing a satisfactory nest egg for retirement doesn't have to be that hard. For an illustration of how to become a millionaire just by exercising some common sense along the road to oldster status, How to save $1 million in your 401(k) is worth considering.}

Now let's review the ugly and scary reality facing too many Americans today.

3 biggest challenges facing retirement savings tells the sad story:

"When considering the biggest regrets of 2014, . . . Americans' top fear is going broke in retirement. Put simply, Americans are seriously afraid of running out of money in their golden years, and they feel guilty about how they're handling it.

Due to the changing retirement landscape and longer life expectancy, we're seeing more Americans take an introspective look at investing for retirement, benchmarking their progress and acknowledging their successes as well their shortfalls. Nearly 6 in 10 are setting a goal to save more for retirement this year, overshadowing losing weight, paying down debt and taking more trips. And while I'm thrilled to see this long-term focus and goal setting for 2015, our research tells us that many of us are facing some challenges.

So while investors seem to have good intentions, what is really prohibiting them from investing more year after year? In today's economy, here are three of the biggest challenges Americans are up against while attempting to build their retirement nest egg.

Student debt. Debt remains a prominent prohibitor to investing for retirement, particularly among those saddled with student loans. Student loans are now the second largest debt class, at $1.2 trillion, behind only mortgages ....

Aging parents. As life expectancy grows and health-care costs rise, more middle-aged adults are playing an active role in their elderly parents' care. With many also financially supporting dependents of their own and nearing retirement age, this so-called sandwich generation is feeling significant financial pressures. Defined as people who are simultaneously caring for a minor or grown child, in addition to a parent age 65 or older, this generation fits the profile of approximately more than 4 in 10 Gen Xers and one-third of baby boomers, according to Pew Research.
Everyday trade-offs and competing priorities. We continue to witness a trend of lifestyle preferences derailing financial goals . . . . Most Americans are not convinced their short-term decisions really affect their finances in the long run, particularly what they spend on entertainment and eating out. Furthermore, future finances are clearly not top of mind. More than half respondents in our survey don't think about their long-term finances when making daily purchases.

These three challenges are extremely prevalent in today's world and are most likely some of the largest contributing factors to why more than half of respondents in our latest Merrill Edge Report did not save for retirement at all last year. . . .

Investing for retirement is a marathon, not a sprint. Small, steady strides are the key. So if you are facing one or all of these challenges, it's important to recognize the need to prioritize retirement and take actionable steps, investing as much as possible as early as possible."

Summing Up

Saving and investing should be an important part of everyone's planning and attention during the working years.

To do otherwise is to jeopardize having sufficient income later when we will need it and are unable to earn it --- in our oldster years.

Living in the present while preparing properly and adequately for the future, albeit perhaps not easy, requires our ongoing attention. It's simply something that we must do.

So let's do it. That's my take.

Thanks. Bob.

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