Here's How Much Money Americans in Their 30s Have Set Aside for Retirement
Inflation is down from the peak, but Americans are still looking at high prices. This is why, many Americans are failing to save for emergencies, let alone retirement. According to Bankrate, only 22% of Americans have contributed to their retirement funds in 2022. As per sources, Americans need close to $1.3 million to retire comfortably. However, as per a recent study by Fidelity Investments, Americans who are in their 30s have saved significantly less than the required amount. As per the study, the median amount the Americans in their 30s have in their 401(k) is around $20,400.
The low amount is due to several reasons. One of the biggest reasons is the rising living cost which has made it tough for people to live comfortably with their wages, let alone saving.
27% of people say that paying down their credit card debt has become a barrier to saving. However, according to Anne Lester, a retirement expert, the good news is that it's not too late for people who are in their 30s.
In a conversation with CNBC Make It, she said that people in their 30s still have plenty of time. " You’re just going to end up saving at a slightly more aggressive rate than if you started earlier, and that’s fine," she said.
Fidelity urges people in their 30s to contribute 15% of their income towards retirement savings, however, the percentage Americans were contributing was 4% shy of the recommended percentage.
Americans who have not started saving yet and are already in their 30s are recommended to make a few short-term sacrifices to kickstart their savings.
“If you promise yourself that you’ll save future raises, it actually won’t be as painful as it sounds,” Lester says.
She also talks about how boosting the emergency savings can also help with contributing to 401(k).
"My recommendation is boost your emergency savings, contribute enough to your 401(k) to get your employer match, and then save for the good stuff like a vacation," she adds.
According to Forbes, there are a few steps that you can take today to improve your retirement planning. The first step is to evaluate, how much you need to save. To evaluate that, you will need to take a look at the number of vacations you take each year, the possibility of medical emergencies, and more. You can also use the 25x Rule to calculate your retirement requirements. All you need to do is estimate your annual expenses in retirement and multiply it by 25. This means if you currently spend $50,000 a year, you will need to save $1.25 million to retire comfortably.
It's also important to understand that while experts say that the ideal age to start saving is at the age of 25, no set age will work for everybody. Having said that, if you are 35 and older and have not started saving, then Forbes recommends setting aside 24% of your income until age 62 and then 15% of your income until age 65. It's also recommended to increase your savings rate from time to time. This will help you to combat inflation in the long term.
