Americans fear they can not save the $1.1 million on average that they need to retire.
A recent survey conducted by Schroders, a U.K.-based investment manager, found that less than one in four workers believe they can save that amount of money by the time they reach retirement.
The survey was conducted among 1,000 investors ages 45 to 75 in February, with a median household income of $75,000.
Only 22% of people said they feel they will have enough money to live comfortably once they retire.
In 2021, 26% of people said their savings would be sufficient.
The majority of people said they would not be able to meet the $1 million goal and only 56% said they would be able to save less than $500,000 with another 36% estimating saving less than $250,000.
Only 24% of Americans predict they can save $1 million for retirement.
More than half or 54% of people who are 60-67 years old said they would have under $250,000 in savings,
About 57% of people who are already retired said they had less than $250,000 accumulated.
Are Savings The Answer?
The lack of retirement funds could inspire more workers to increase their savings now.
Greg McBride, chief financial analyst for Bankrate, a New York-based financial data company, told TheStreet that could happen soon.
“Most workers don’t save enough for retirement and the belief many have that they will not have enough saved to retire might actually motivate them to increase their savings rates," he said.
"This is particularly important for younger workers who will have longer lifespans, higher medical costs, more uncertainty about Social Security and fewer pensions than the generations preceding them, but they also have the most time to grow and compound their savings.”
Crunching The Numbers
A deeper dive into the study's numbers showed more angst around retirement.
Only 3% of people who are in retirement said they are “living the dream” while 37% said they are comfortable and another 37% said they felt “not great, not bad.”
The remainder of retirees are facing obstacles with 18% who are struggling and 5% are “living the nightmare.”
One major issue facing retirees is shelling out more money for expenses.
Of those, 44% said expenses are higher than expected with only 8% who said expenses are less.
The top four concerns workers have about retirement are impact of inflation on their savings, higher healthcare costs, a downturn in the market reducing their retirement funds and health issues depleting their money.
“These are seriously challenging times and they seem to be taking a toll on the American worker and their belief about achieving a comfortable retirement,” said Joel Schiffman, head of intermediary distribution, North America, Schroders.
"This year inflation is the number one concern Americans have about their retirement and next year, it may be something else," he said
A large number of people or 69% plan to keep working once they reach retirement.
That's because over half of Americans or 56% need the money to pay for living expenses,
Of that, 51% want to stay busy and 49% want to remain active and in good health.
How Consumers Can Save More Money
Workers are now faced with saving more money on their own through 401(k) and IRA plans and should rely less on Social Security payments, McBride said.
“Save early and save often," he said. "Even workers closer to retirement age can take steps like utilizing catch-up contributions to tax-advantaged retirement savings accounts, working a bit longer and delaying Social Security to put themselves on firmer footing once leaving the workforce.”
Consumers should prioritize saving money today instead of a goal they need to reach that is several decades away, experts said.
Henry Yoshida, chief executive of Rocket Dollar, an Austin, Texas-based self-directed individual retirement account provider, told TheStreet priorities are key.
"Like all big, long term goals, it is best to focus on getting started on the present and not be overly focused on the big end goal," he said.
"Starting to save even small amounts for retirement today will become a self reinforcing habit over time," he said.
"Even if you can only save $100-$150 per month to start, it will begin to chip away at the longer term end goal of a secure retirement."
How to Start Saving
Getting started on a savings plan can be challenging.
"Oftentimes, getting started is the hardest part, so I always encourage people to just get started, however small the amount may be," Yoshida said.
People need to place a higher priority in amassing savings for retirement when they are younger and can achieve that goal by creating a budget, Robert Johnson, a finance professor at Creighton University, told TheStreet.
"A big problem with many people is that they simply fail to budget," he said.
"Budgeting is critical. Specifically, one should not simply budget and track expenses, but one should budget for retirement savings."
Berkshire Hathaway CEO Warren Buffett has also offered advice in the past.
“If you want to make saving a priority, take a look at how you budget," he said. "Do not save what is left after spending; instead spend what is left after saving.”
The amount of money going toward a retirement account should be a line item in your budget, Johnson said.
"You don't successfully build wealth by simply taking what you have left after all your expenses," he said. "We accomplish what we prioritize. Prioritize savings and invest those savings."
Relying on Social Security benefits to make up the gap in income is a mistake.
"I believe there is a misconception among many Americans that Social Security will provide for their retirement," Johnson said.
"They are in denial about the standard of living that relying solely on Social Security will provide them."
