Happy Retirement Planning Week! In honor of the celebration, it’s time to take stock of where Americans stand. According to the 2017 Employee Benefit Research Institute (EBRI) Retirement Confidence Survey, we still have some work to do:
- 61 percent say they have saved for retirement
- 41 percent have calculated out how much money they will need in retirement
- 38 percent have estimated how much income they would need in retirement
- 38 percent have estimated the amount of their Social Security benefit
- 34 percent have estimated their expenses in retirement
Given the statistics, it’s no wonder that 30 percent of workers report that they feel mentally or emotionally stressed about preparing for retirement. Another 30 percent say that they worry about their personal finances while at work. “Half of these workers believe they would be more productive at work if they didn’t spend time worrying.”
How can we help those who are feeling this kind of debilitating anxiety? As previous EBRI confidence surveys have found, those who have a retirement plan, regardless of type, feel less stressed about retirement preparations and are more likely to have started saving for retirement. About three-quarters of employed workers have access to an employer-based retirement plan and 83 percent of eligible employees say they contribute money to their employer’s plan.
Of course just providing access to a retirement plan will not solve the problem—there has to be a concerted effort to help those who can, scrounge up just a little bit more and direct it towards the long-term goal of retirement. Perhaps this will have to take the form of gentle nudging or reminding. There has already been evidence that automatically enrolling workers into retirement plans leads to increased participation rates. Additionally, automatically escalating contribution rates by small increments can help participants put more money to work. If your employer does not offer a retirement plan, you can implement these strategies yourself. Where possible, automate your saving and investment systems, which may lead to better outcomes.
Starting from scratch can be daunting, but like so many other difficult tasks, like diet and exercise, it’s easier to begin with a small goal. Instead of telling yourself that you need to accumulate hundreds of thousands of dollars by age 70, just try to save one to three percent of your earnings in a retirement account by the end of the year. Focus on establishing the habit and then slowly build on it.