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Is Your Retirement Planning Frightening?

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What does your retirement planning look like? Planning for retirement takes work and dedication, please make sure you're taking the steps necessary to save.

For one reason or another retirement planning has been on my mind lately. I could probably attribute it to our personal situation as we look at how to save for retirement while running our own business, but I know a lot of it has to do with numbers I have been hearing lately. Mrs. Frugal Rules and I were listening to NPR the other day and they were saying that 47% of Americans have less than $25,000 saved for retirement. That is a crazy number and one that does need to turn for the better. I believe that a number of factors are at play in regards to the specifics of retirement planning, but at the end of the day I think it points back to an obvious lack of concern and thinking only about today. It’s easy to neglect saving for the future when times are tough, I cede that point, but a lot of it comes down to choices. Each day we are faced with choices, some small and some big and I believe we often we do not think of impact those small choices will make over a long span of time.

What does your retirement planning look like? Planning for retirement takes work and dedication, please make sure you're taking the steps necessary to save.

How Does Your Retirement Planning Stand Up?

 

I found this infographic a few weeks ago and knew instantly that I wanted to share it with you, my readers. I know it’s not bright and colorful, but the numbers it points out are frightening to say the least. The figure I want to draw attention to says that 36% of Americans are saving nothing for retirement at all. I know that retirement is a term that can be debated by some and that’s not the point of this post; the point is that unless you plan on working until you drop then planning for retirement needs to be a concern for you. If investing in the stock market is not your thing I get that, but please do not let that hold you back. You can invest in things like index based etfs or mutual funds or you can even work in something like investing in real estate to help build up and diversify income streams. If you find yourself not thinking about retirement planning, then I encourage you to start now even if it’s in small amounts. Time is the greatest thing overlooked when it comes to saving for retirement which is truly a shame. If you find yourself not knowing where to start, then I encourage you to check out a retirement planning calculator like the one located here on Yahoo Finance and see what it has to say and what you might be able to do.

America�s Frightening Retirement Facts

America�s Frightening Retirement Facts infographic

 

What stood out to you in this retirement planning infographic? What is the most frightening part of it?

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more. If you're wanting to learn how to monetize your blog, check out my blog coaching services to see how I can help you take your site to the next level.

Latest posts by John Schmoll (see all)

60 Comments

  • I agree with you that now is the right time to start saving for retirement funds. Without enough money or enough income during retirement stage, you will not enjoy your retiring life.

  • It just amazes me how little people save for retirement. I know many people say that they just can’t afford it, but I think that they really can and just think they can’t. Even saving $10-$20 per paycheck adds up over time. I remember when I first started saving in my 401k and seeing my $25 being taken out of my paycheck. I knew that it would add up, but there still was that voice in the back of my head saying how small this amount of money is and what’s the point. But fast forward close to 15 years and with additional contributions and compound interest, my balance is sizable.

    • John says:

      As it does me Jon! You bring up a great point about starting small. Even if it’s only that $10-20 per paycheck, that amount will grow over time and develop that discipline of saving and investing that will carry you over the long term.

  • It’s really unfortunate how little savings most people have as they near retirement. I do not try to pretend to understand their situation and I don’t think bashing anyone help the situation, but for me personally it does motivate me to have more saved so that I can retire without worrying about whether my cash reserve will run out before I pass. I would also like to leave something for my heirs (assuming I have some) and feel free to pursue volunteering and travelling without worrying about needing a part-time job.

    • John says:

      I agree DC, it is unfortunate and what is troubling is that the numbers continue to go in the wrong direction. Being able to leave money for those you leave behind is a great point and is a goal I have as well.

  • I am turning “shift into high gear” later this year. I feel like I have done ok up to this point but it is true. I really need to shift into a higher gear. I need to finally get additional sources of income once our debt is paid off. Luckily, my wife is younger which gives us a shot at having enough once we both are retired.

    • John says:

      That’s awesome Alan…that you’re seeing that need to ramp things up. I fear that too many do not see that need and am concerned it will come back to bite them in the long run.

  • Wow, John, those numbers are downright scary. 🙁 Even in our mess of a financial situation, we’ve got much more saved for retirement than the average American. Now’s the time to make the choice to get in gear here. We’ve watched as all of our parents hit retirement age with not enough money, and are now struggling as they learn to live within their meager means. Not fun.

    • John says:

      Yes they are Laurie! That is very encouraging to see that you have been able to put away significantly more than the “average” American. So many just continue in the downward spiral and do not look at the long term impact of their decisions.

  • Stephanie says:

    I remember feeling shocked when my older sister in law a few years ago told me she only had $1500 saved for retirement (and was 36 at the time). I couldn’t believe it. fast forward a few years and most of my friends save little (3-5% – just enough to get their match) or nothing at all. I’m here maxing out my 401 and roth and saying no to lunches and after work drinks and expensive dinners out on the weekends. I would say that I have to make a daily choice about time/money/values. I often wonder if that’s going to get easier or people will just stop asking . . . My best friend at work said she doesn’t expect she’ll ever quit working – she’s 38. I think she’s probably right and it makes me sad for her because it’s not like either of us enjoy our work that much.

    • John says:

      That’s exactly my point Stephanie! You’re seeing that time/money/values perspective that I think is so vital to have. Who doesn’t like going out to eat or for drinks after work? I know I do, but those things all add up over time and with the impact time has on money it just makes it worse for those that are not looking at their values.

  • Jose says:

    I’m not too scared of my retirement planning, it’s the actual act of retiring that scares me!

  • What’s really sad is that with all the horrible numbers shown, most of those that are concerned about retirement won’t make a change or seek out information. If they had they’d feel more comfortable with their situation. There’s plenty of free information online that is easily accessible by just about anyone.

    The infographic is nice, but I don’t fully agree with their age related plans. Why is creating a budget, paying yourself first, and becoming an opportunistic shopper a plan for your 30’s and 40’s? Budgeting or spending plan or whatever you want to call it should be step 1 for anyone trying to improve their finances.

    • John says:

      I agree JC, that is sad and all too people will seek out help to make those needed changes. There is a lot of information and resources out there and it’s just a shame in my opinion to not take advantage of it.

      Great point about the age related plans. That was honestly one of the things I did not like about it. I would move up a big chunk of it to the 20’s. Assuming you’ve graduated college, or at the very least a job and on your own, many of those things should be started ASAP.

  • Sweet infographic! But the numbers are very frightening. While I plan to work well into my 70s we still have a rock solid retirement plan that should allow me to do what I love by the time I am 40. I honestly thing these numbers are so profound because a lot of individuals believe “someone” will take care of them and it will “all work out.” It will literally break my heart to see this baby boomer generation move into poverty.

    • John says:

      Thanks Marvin and I completely agree. Many think that things will all eventually work out for them. While I do wish that for people, it simply will not happen for many…unless they come into money all of a sudden. It’s just more proof of not thinking past your nose in terms of money.

  • pauline says:

    it is really scary how little people are prepared for retirement. I don’t like the European system very much because the money they take from each paycheck is high and I think I can achieve more with my money but at least every worker will have a pension at retirement age. Kind of a retirement for dummies fund.

    • John says:

      I agree Pauline, and I have to admit that I do not know much about the system Europe has in place. A pension is great and all, but you need to be able to support yourself and take action to prepare for the future.

  • It is scary that so many people aren’t saving for retirement at all. I’m not sure if they just don’t plan on retiring, or if they just don’t have any clue. Regardless, I refuse to be one of those people:)

    • John says:

      I agree Greg, we will not be one of those people. I think a lot of it comes down to simply not thinking about it and not making it a priority. This is definitely not a case of ignorance being bliss.

  • I am saving for retirement, but I got a later start than I should have because of my debt. I wanted to focus on one thing at a time. I was paying close to 17% interest on my credit cards at the time and the 7% that I could make in the stock market didn’t make up for the losses. I am now in the stock market and just filled up my 401k to meet my employers match. I also have an IRA that I fund by myself just as another account.

    • John says:

      I am in the same boat Grayson. I waited too long and had debts that I wanted/needed to pay off. I am now trying to make up for that lost time and I think the key is knowing that and being proactive because of it.

  • The infographic is a little bit confusing. Why is creating a budget done in your 30s? That should be done the moment you move out of your parent’s house if not sooner. Same with saving and investing (pay yourself first), that should be started the moment you’re no longer living hand to mouth. You might not be able to save much in your college and grad school years, but even if you save 5%, you’ll be ahead of the game in terms of compound interest, emergency funds, and saving and investing experience.

    • John says:

      That’s a great point MFIJ and one of the things I did not care for with the infographic. I think it points back to the issues we see at the top of the graph. I believe that many of the things can & should be moved to the 20’s…assuming you’re out of college/on your own and making some sort of a salary.

  • What’s puzzling to me is how scared many people are of investing. Debt they know, so debt they embrace. For some reason, the fact that you’re 100% guaranteed to lose money with debt, that doesn’t faze them. Yet the thought that there’s a chance of only 25% that they may lose money with investing, that thought scares the Halloween out of them. Puzzling…

    • John says:

      I agree William, it is very puzzling. I think many do not put the numbers together and see that they’re almost guaranteed to lose with most debt they can accumulate. I don’t know if it’s lack of knowledge or unwillingness to learn and invest, but it is prevalent.

  • Michelle says:

    I would think that me and W are pretty good with our financial lives. It does help that I have a masters in Finance though 🙂 We have so many friends that don’t save or anything though because they don’t see the point. It truly is scary!

    • John says:

      I would agree that having that Masters in Finance should help you just a little bit. 😉 I am thankful that I learned what I did in my MBA program and hopefully it has helped us & will continue to do so. It is scary to see friends not put away for the future and hope that they will see the light of day at some point.

  • We are saving almost 50% of our income. I don’t want to be tied to my job forever.

  • I love your infographic John. I’m said to say that I fall into most of those bad statistical categories. At this point I have very little retirement savings, though I just started my first professional job so I guess I can start making up ground. Either way, it is good to always have retirement saving on your mind so you make it a priority.

    • John says:

      Thanks Nick! I think an important thing is realizing that you have little in savings, but then taking action (as you’re able to) to rectify that. Does your employer offer a 401k match? If they do, that is the first thing I would take care of, at least to take full advantage of the match. Beyond that, a Roth is a very good option to pursue in many situations.

  • Very interesting infographic! All of our retirement funds are invested in real estate and oil & gas, and fortunately are doing quite well. Some people are very good at ensuring that they will have financial stability in their old age (like my parents, and some never think about it. I have an aunt and uncle that were quite successful and very rich in their 30s, 40s, and 50s, but never thought about setting up retirement funds. Now they are close to 80 and have very little money to live off of.

    • John says:

      Thanks Sicorra! That’s too bad to hear about your Aunt & Uncle. I’ve spoken to a number of people in that very situation and it’s sad because they can do nothing to go back and change it. At least it serves as a reminder to me that we need to be vigilant in our saving/investing.

  • I agree those numbers are frightening. We do have a “today” mentality, but tomorrow comes so fast. And most people really, truly do not want to work until they drop. They want to have a choice to leave work and do something else – whatever that may be. So many people seem unwillingly to give up a lifestyle they can’t afford, but I don’t know if they truly understand the consequences of their current actions.

    • John says:

      I agree Shannon, we do have a today mentality and time goes by way too fast. Of course, I did not realize this until I started to get older. 😉 I think a lot of it does come down to not understanding the consequences to their actions and think it’ll just magically take care of itself.

  • Mark says:

    I turn 34 tomorrow, and I’m one that hasn’t gotten the early start you’d need if you wanted to cruise into retirement. When I look at the monthly savings amount required to reach a reasonably nest egg by the time I’m 50 (or 60), it’s pretty intimidating, but at least now I know! What about my millions of peers who aren’t even going to think about this until they’re 40-45?

    • John says:

      Happy Birthday Mark! I am in the same boat and put it off for way too long, but now we’re trying to do what we can to correct that as much as we can. I agree, at least now we know. The key is taking that knowledge and acting on it.

  • Mr. 1500 says:

    “Mrs. Frugal Rules and I were listening to NPR the other day and they were saying that 47% of Americans have less than $25,000 saved for retirement.”

    Wow and holy crap. I see a whole lot of Wal-Mart greeters in about 30 years when 70 year-olds need jobs. Maybe Wal-Mart could have a chorus greeting people?

    What makes all of this scarier, is that no-one has pensions anymore. My parents were horrible savers. I remember one time when my parents were in their late 50s, my mom bragged that they had $25,000 saved up. Really mom? That flat out sucks.

    However, they have a massive golden goose in my dad’s pension, so they have nothing to worry about.

    I look at my contemporaries in their 30s and early 40s. Not only do they not have a pension, but many of them don’t even bother contributing anything to their 401(k). I repeat, not even enough to get the company match. I asked one guy about this and he said, “I’m too young to worry about that stuff.” Ahhhhhhhhhhhhhhhhhhhhh!!!

    So Wal-Mart, I hope you have big hiring plans.

    • John says:

      ” Maybe Wal-Mart could have a chorus greeting people?” Lol! That would be both odd as well as a bit on the humorous side. The funny thing about what you mention is that I am writing a post for Friday about how Wal-Mart seems to actually be lowering their hiring numbers.

      That said, I agree that it is sad…especially in light of the fact that there are so few pensions today. This shifts the responsibility to us as adults to be saving, investing and looking to the future. I, for one, have no plans of living off of government cheese so that requires action today on my part.

  • The infographic said: 46% of Americans have less than $10K saved for retirement. Now that’s scary. When are we going to wake up and learn to stop spending frivolously and start getting serious about saving? The sad part is that those who are responsible take the risk that there may be social security means testing in the future. We just don’t know what the future holds.

    • John says:

      I agree Suzanne, that is pretty scary. It’s not even a good sized E-Fund for many. I hope the waking up does happen at some point soon, though I am not really hopeful.

  • My M.I.L. is a classic example of someone who worked hard, lived for today and now in her old age has zero savings to show for it. It is a constant reminder for my husband and I to keep saving and investing as we currently do. I have no intention of ending up in that kind of financial bind.

    • John says:

      That is sad K.K. and I have spoken to many people in that same situation. I have no intention, as far as it’s up to me, to end up in a situation like that which requires us to take action now.

  • I’m not surprised by the data to be honest John although I really don’t know what the stats are for us in Canada. We are only in our 30’s and yes we are thinking and planning for our retirement now while we can. The earlier the better I say because we see so many seniors living in or near poverty levels it scares us. We want to make sure we are ok when the time comes to say good-bye to our jobs. Life has no guarantees but we certainly can plan for what we know we may need and budgeting to get us there. Great post John.

    • John says:

      I really was not surprised either Mr. CBB. You bring up a great point about starting earlier as opposed to later. That time aspect is a huge one that way too many overlook completely.

  • kathryn says:

    My husband and I retired 3 years ago at ages 46&50. We travel 8 months of the year in Australia and 4 months in our home in Canada (summer all year round:) )
    We were always on a very modest income (30K), and while the 4 kids were growing up, we had one parent always at home.
    We maxed our our contributions for our RRSP (Canada..equiv to Roth 401k?) and started out with a very modest home, and upgraded a bit as the family increased.Paid it off asap. Our biggest motivator was not to be reliant on a gov pension, and we wanted the ability to retire young. We also knew after a few years of maxing our RRSP, saving wasn’t going to cut it for us.
    After our home was paid off, we withdrew all the available equity and started buying rental properties.Undervalued one, and did very minor renos (painting and cleaning mostly). We are very hands on landlords..and when we do travel, we have 2 married couple that work for us, in caring for our properties. They follow our instructions, and are not a property management company.
    It took us 6 years after starting being landlords to quit employed work. We are still concentrating on paying off debt, and take a very small income. Years of living very frugally has been a great asset for us to acheive this. We still only spend an average of $1000 month to live on.
    We do not deny ourselves anything, but if we want something, we find a cheap way of doing it.While in Australia, we bought a second hand (2006) van, and made it a camper. We then do housesits for people while they go on vacation. We get to stay in their homes, and look after their pets/farm animals.All we need to provide is our food.In between housesits we camp.
    Unless, you are on a high income, and can save a lot, the average person will need to rethink just living off savings in retirement.

    • John says:

      Wow, Kathryn, I am just a bit envious of the year round summer. 🙂 Your story is just further proof that if you make the right choices and make them a priority then having that lifestyle in retirement is possible.

      • kathryn says:

        Thank you.
        I’d like to point out, even if you do put off thinking about your retirement until around 40, it isn’t too late. For us, it just meant leaping into being landlords with both feet. Spending every moment working on these properties, instead of hiring someone else, saves money.
        I always say, you cannot save your way to wealth. You need a continuing supply of income ..which is what rent does for us. Some months we just break even, because tenants will not always pay their rent, they will do damage, things need maintenace and repairs, and they will leave the place disgusting, more often than not.
        Saying this, the benfits outweigh the cons.

        Also if someone can take a hobby and find a way to make an income stream, that is great too.

  • Justin says:

    We’re saving, but not enough. It’s a scary thought. I really think that our generation, or maybe even the one before us, is going to have a retirement crisis. A lot of retires right now have pensions. However, people in their 30’s and even 40’s don’t have that advantage. Some may have 401(k)s, if they contribute, but often that’s it.
    It’s a pretty scary thought.

    • John says:

      I would tend to agree Justin, that we may likely face a retirement crisis. The fact that so many plan to work until they drop is particularly striking. I think it’s incredibly short sighted and hope that changes are made soon.

  • I know people save too little for retirement, but it’s really shocking to see the real figures like that. It just shows how far ahead of the game you can get by starting early and sticking to a savings plan.

  • The thing about retirement is that it always seems so far away…..like it’s one of those things that you can do tomorrow, or the next day, or the next day. Quite frankly I think it’s just another piece of evidence that we need financial education in our school system – some people just don’t understand how big of an impact putting even a little towards retirement consistently when you first enter the workforce can have on your financial picture later in life.

    • John says:

      I agree Travis, and to combine that with the mentality of “now” it poses a big problem. Starting something towards financial education in schools is vital, but I would say it’s even more important to start these things in the home as well.

  • The 40% statistics of those who plan to work until they drop is striking. Our work-centric culture has huge psychological impacts, and obviously financial, as well.

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