1/2 of Americans Believe Retiring at Age 65 Is Unrealistic, Says New Survey

The American Dream.... work hard and then retire at 65 and live the rest of your life having fun and enjoying the grandkids. Or at least that was the dream until recently. Inflation is rising, costs are increasing, and Americans are woefully unprepared for retirement.

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Unrealistic Trends

A survey recently done by Equitable’s revealed that nearly half of consumers (47%) believe it is unrealistic for them to retire before or at the traditional retirement age of 65. Instead, they expect to retire nearly a decade later at an average age of 74. The top three challenges/obstacles cited were increasing living expenses (68%), fear of not having enough money saved (66%), and a lack of guaranteed income for retirement (39%). This reality contrasts sharply with the 18% of respondents who want to continue working past the age of 65.

“Today’s world is full of uncertainty, and inflation continues to make everything more expensive. This is having a profound impact on Americans’ retirement confidence, causing many to feel they will need to work well beyond age 65 to save enough — not out of choice, but rather necessity,” said Nick Lane, President of Equitable. “While everyone has a different financial situation and vision for retirement, a financial professional can help develop a plan that keeps you on track. The ultimate goal is to retire on your own timetable, when it makes sense personally and professionally.”

Consistent and Guaranteed Retirement Paycheck

Equitable’s survey also found that if given the choice, nearly two-thirds of consumers (64%) would prefer a consistent and guaranteed retirement paycheck versus determining how much to withdraw from their retirement accounts to make their money last throughout their lifetime. This sentiment was generally consistent across all age groups, with millennials expressing the most interest at 70%, followed by Gen X (65%), Gen Z (62%) and baby boomers (59%).

With that said, it is noteworthy that Equitable’s survey found that baby boomers, those closest to retirement, are the least interested in the security of a steady paycheck in retirement compared to younger workers, like millennials. This perhaps can be attributed to the fact that most baby boomers, given their stage of life, are more likely to already have access to reliable sources of retirement income — such as payments from Social Security or a traditional pension. Meanwhile, younger generations face more uncertainty in these areas and will likely need greater support to ensure they don’t outlive their savings in the future.

“Automatic enrollment, automatic escalation, and target-date funds have been game changers in helping more Americans accumulate retirement savings. However, what’s often overlooked is how to help workers convert their savings into a reliable stream of income in retirement,” said Lane. “With the disappearance of traditional pension plans, the burden has shifted to individuals — especially younger generations — to seek the education, guidance, and solutions to ensure their savings last throughout retirement.”

We asked various financial professionals, such as ChFCs, CFPs, CCFCs, and other wealth advisors, for the best tips on how to start saving for retirement.

Pay Yourself First

The first rule is to pay yourself first. We say this all the time, but what does it mean?

Matthew Benson, CFP at Sonmore Financial, says, "Pay yourself first. In other words, save for your retirement before any funds are deposited into your checking account. The simplest way to do this is by payroll deduction contributions into a company 401k. If your company does not have a 401k, you can often set up an alternate bank to deposit to that you only deposit funds into your IRA or other investment account. If your goal is to save whatever is left at the end of the month into retirement, I have a pretty good idea of how much that will be, and so do you."

Start a Roth IRA Now

The best time to start a retirement account was 20 years ago. The next best time was yesterday, and the next best time is right now.

Joe Petry, Ph.D., CFP Founder and Financial Planner, Mayfair Financial, advises that everyone should start a Roth IRA as soon as possible. He says, " Even if you don't put much into it to start, it grows tax-free. By starting early, you will have more flexibility around withdrawals later by starting the 5-year clock, which governs your ability to withdraw. "

Roth IRAs are actually really easy to start, so get online and do it right now.

Start as Soon as Possible

When should you do all of these? Now. This minute. You are reading this on your computer or phone, which means you can access the internet (unless someone printed this out and handed this to you, but we doubt that)- so that means you can get online and start a retirement account.

Mike Hunsberger, ChFC, CFP, CCFC, owns Next Mission Financial Planning. He says to start as soon as possible, even if it may seem too late or too early.

He says, "The biggest thing is to get started as soon as possible. Time is your ally. While compounding your investment is important, when you are just starting out, your savings rates and amounts will have a much greater impact than your earnings. Start with what you can save and then every time you get a raise, invest 50% of the increase in your pay. You haven’t learned to live on it so you won’t miss it. This will supercharge your savings over the long term. You’ll also be able to increase your lifestyle with the other 50% of the pay increase. If your employer offers some type of match for your retirement contributions, this is usually the best option to start."

Speak to a Financial Planner

Autumn Knutson, CFP® at Styled Wealth, says if you really don't know where to start and are worried about running out of time, you should speak to a certified professional.

She says, "Let me explain why. While it may seem straightforward to start saving toward retirement as quickly as possible, the next question is 'to where?' and 'how much?' There may be areas of your complete financial picture that need to be cleaned up that are of greater benefit to getting you to reach your goals than direct contributions to a qualified retirement account. For example, perhaps there may be high-interest debt that charges interest at a higher rate than would be reasonable to expect from investing, or perhaps there are tax advantages to save at your income tax rate for expenses you already have for health, childcare, dental, charity, tuition, or for a business.

There are sometimes incentives to save money into certain accounts that may be worth considering one option over another, such as employer matching contributions, or perhaps triple tax savings opportunities for a health savings account, or broader access to your funds before 59.5 in a Roth IRA or brokerage account for those who plan to retire in their 50s or younger. There are numerous considerations to have, and ultimately, having a plan that optimizes your specific financial goals, financial circumstances, and opportunities available to you will set you up with streamlined success for retirement and beyond without wondering if you missed something along the way."

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