Planning for retirement requires a decades-long commitment to disciplined saving. However, many Americans are attempting to meet basic expenses on paychecks that don't stretch as far as they used to due to years of inflation.
This diminished purchasing power has made it difficult for households to prioritize saving for their future since so many people live paycheck to paycheck — right now.
However, not putting enough time and money into retirement planning can have significant repercussions down the road.
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A universal regret among retirees is not saving enough during their younger working years and then starting to save for retirement too late. Most people find retirement costs higher than expected and discover their savings don’t stretch as far as anticipated.
The Bureau of Labor Statistics found that the median retirement income falls short of annual expenses for retirees, including housing, food, healthcare, and transportation. The rising cost of living is outpacing savings and prompting retirees to revisit their financial plans, with many considering returning to the workforce part-time to supplement their income.
The majority of retirees — 64% — say they wish they had prioritized a few key areas earlier to set them up for success in their golden years, according to a Voya consumer research survey.
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Save early for the biggest payoff
Many consumers find it challenging to prioritize saving for retirement while balancing rising costs for daily expenses, student loans, credit card debt, and the costs of having a family.
However, compound interest is one of the most significant factors in retirement savings, which is why financial planning experts say saving should be a priority as soon as possible. Retirement account funds earn compounded interest, meaning that interest is accumulated on both the principal amount and previously accrued interest. This increases savings exponentially over time as the principal balance grows and interest is applied.
Those who wait too long to start saving could miss out on more than $1 million over their lifetime, per the Security and Exchange Commission's (SEC) Office of Investor Education and Advocacy retirement calculator.
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A May 2024 survey from Corebridge Financial found that 63% of retired women wish they had begun saving for retirement earlier. Inflation and running out of money during retirement were among their top financial concerns.
Other key regrets include not paying off their mortgage before retiring, not contributing more to employer-sponsored 401(k)s, and not investing in the stock market earlier.
Early preparation, consistent savings, and understanding your long-term retirement plan are the best ways to avoid outliving your savings.
Men and women have the same retirement concerns
When planning for retirement, men and women share the same concerns: saving enough money to ensure they won’t outlive their income, identifying the right age to start collecting Social Security, managing health and healthcare costs, and maintaining a sense of purpose.
However, the disparity in retirement savings between men and women can threaten women's quality of life as they age.
Related: How average Americans can better plan for 401(k), retirement income
Women have 30% less savings than men when they retire, caused by a combination of factors. Despite the wage gap closing, women still make just 83 cents for every dollar a man earns, and women are often relegated to family caretaking, setting them back in their careers and opportunities to save for retirement.
Women are also less confident in their ability to manage finances. Corebridge Financial found that women are far less self-assured when investing in stocks and mutual funds, paying down debt, building an emergency savings fund, and even buying a home.
Women's average life expectancy is 80.2 years compared to 74.8 years for men; ensuring they won’t outlive their savings should be a top financial priority for women of all ages. However, longevity risk is a very real possibility for both men and women, especially as food, housing, and healthcare costs continue to skyrocket.
Maximizing catch-up 401(k) contributions, paying off all debts before retirement, and having a detailed financial plan can help ensure you have enough money to last through retirement.
Related: Veteran fund manager sees world of pain coming for stocks
