Millions of Americans are at an uncomfortable crossroads: nearing retirement, yet increasingly concerned they may not have saved enough. For many, the prospect of a comfortable retirement has become little more than a pipe dream, fueling fears they will have to continue working forever.
A new survey of 1,200 Americans aged 48 to 90 uncovered recurring themes of regret in financial planning and investment strategies. The answers provided insight into common missteps-from a lack of financial education to those unexpected twists in life that got in the way of savings plans.
Early Investment Education is Paramount
One of the most common regrets revealed in this survey was a general lack of money management skills during the most pivotal years of earning. Many people responded that they simply didn’t save or invest early enough in their careers. Supporting this, Vanguard research has documented that individuals switching jobs often decrease 401(k) contributions, possibly causing them to miss out on hundreds of thousands of dollars in their lifetime.
Surveys from the Transamerica Institute and Charles Schwab also showed that baby boomers started saving for retirement at age 35, much later than advised. This late commencement was more often than not followed by too little money to enjoy retirement comfortably.
Unanticipated Challenges Increase Financial Burden
Unexpected life events emerged as a significant disruptor for many respondents. Situations such as job loss, medical emergencies, or divorce left individuals scrambling to adapt their financial plans. Without adequate savings or long-term planning, these setbacks caused significant financial hardship.
Health expenses were a constant concern. Skyrocketing cancer incidents and expensive treatments added to the financial anxieties of many on the verge of retirement. Increasing long-term care needs also present challenges as caregiving expenses can drain families and retirement accounts.
Small Adjustments Can Make a Big Difference
Many of those who answered the survey said they regret not having made regular, step-by-step investments in savings. Even modest increases in savings ratios produce significant payoffs over time. Consider, for example, a $50,000-a-year worker who sets aside 6% of salary toward retirement instead of 5%. This could let that person build up almost $60,000 more over 30 years.
Bank of America’s financial rules of thumb indicate that Americans between the ages of 61 to 64 years should have approximately 8.5 times their present salary in savings. This is usually achieved through early planning and disciplined saving habits.
Different experiences shared by baby boomers teach the necessity of beginning early, seeking counsel on finances, and preparing for anything unexpected. To younger generations, these are important words that illustrate the value of financial education and the long-term benefits of saving consistently.
Some baby boomers blame themselves, but their stories are vital lessons; their experiences are downright essential for proactive financial planning toward a secure and satisfying retirement.
