Money

Ready to get serious about saving for retirement? Here's what you need to do

Not to put you on the spot, but how much do you have saved for retirement? I’m hoping the answer is something, because one in three Americans have nothing put away.

That’s right. New (and unsettling) research from GoBankingRates.com, a personal finance website, reveals 33 percent of Americans have zero, zilch, nada socked away.

And that’s not the only number that sounds bleak: 56 percent of Americans have less than $10,000 saved for retirement and about 75 percent of Americans over 40 are behind on their savings.

“A lot of Americans are so caught up in dealing with their financial realities of today, it can be hard to feel the urgency that will prompt you to take action to start saving for retirement,” says Elyssa Kirkham of GOBankingRates.com.

You can blame our hunter-gatherer ancestors for that. Goals that are very far off, like retirement, are tricky because we’re hardwired to prioritize the now over the later, to opt for immediate rather than delayed gratification. And this especially holds true for when we have seemingly important expenses to tend to.

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The Magical Math Behind Retirement Savings

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The Magical Math Behind Retirement Savings

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How do you get your savings engine going? First, evaluate where you stand right now, and consider the following:

If you haven’t started…

Start right now, as in, when-you’re-done-with-this-article right now. Your first stop is to explore whether your employer offers a retirement plan. If so, ask when you can opt in. Nothing there? You can open an IRA or Roth IRA at any brokerage firm and contribute up to $5500 a year (more if you're over 50). If you're frightened of losing money in the market, check out a MyRA, an account developed by the U.S. Department of the Treasury. It's a Roth IRA, which only invests in treasury bonds. No fees, no minimum balance and no contribution requirements and no losses.

How much should you be saving? Eventually, 15 percent of what you're earning.

But Bill Losey, president of Bill Losey Retirement Solutions, LLC, recommends people begin with what he calls the 1 percent solution, since people often balk at that 15 percent, get overwhelmed and don't save at all. Try finding 1 percent of your earnings and putting just that away. Then bump up your contributions by 2 percent each year until you get there.

“In essence, we’re going to crawl here before we’re going to walk, and we’re going to walk before we run,” he says.

If you’re playing catch-up…

How do you know if you’re behind? Fidelity Investments offers some benchmarks. By age 30, you should have saved 1X your current salary. By 40, 3X. By 50, 6x. By 60, 8x. And by 67, 10x. If you're behind, try to increase your contributions by another percentage point or two a year (and downsize your lifestyle if needed to make it possible.) If you’re 50 or over, retirement plan catch-up contributions allow you to kick another $6,000 into a 401(k) or similar plan as well as the $1,000 additional into IRAs.

Don’t leave money on the table....

Many employers will match a certain percentage of the contribution you make to your own qualified retirement account, up to a certain dollar amount. Take advantage of it.

“[That’s] free additional savings,” says Kirkham. “It will help to really pump up your efforts so that you’re really making more of a difference with less.”

Make it (almost) mindless…

Make your savings automatic. Automate your savings every month — or after every paycheck — so that you’re building a healthy financial future without even having to think about it.

“[It’s] really important so that you’re not having to make that decision every month,” says Kirkham. “You’re not having to exercise that willpower — it’s just happening automatically.”

--- with Hayden Field

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