Magazines, newspapers, and websites publish countless articles about retirement preparedness. Many say future retirees aren’t saving enough. Some, surprisingly, say to relax — you won’t need as much as you think.
We don’t want to sound alarmist, but it’s a safe guess that more people are in the not-saving-enough camp than in the have-more-than-enough camp, especially with future medical costs looming as a great unknown.
Learning from those who’ve been there
Stumbling on Happiness, a book by Harvard psychologist Daniel Gilbert, is a well written, insightful, laugh-out-loud examination of why we so often make bad decisions. Chapter by chapter, he explains how our tendency to misperceive how we’ll feel in the future or know what we’ll need when the future arrives leads to so many decision-making mistakes. Then he comes to a simple solution for making better decisions: ask others who’ve faced similar situations how their decisions worked out for them.
When current retirees are asked about their retirement preparations, common regrets include borrowing too much, retiring too early, and not saving enough money.
Research from the Transamerica Center for Retirement Studies emphasizes that last one, noting only 16% of today’s retirees “strongly agree” that they built a large enough nest egg.
If you’re not saving enough, far better to realize it now, identify what’s holding you back from saving more, and do something about it.
What gets in the way of saving enough
When people are asked why they aren’t saving more, many simply say they can’t. They don’t make enough money to cover their bills and save. For some, that’s undoubtedly true. But many others could save more.