Saving

Americans want to save $1.9 million for retirement and 53% think they're 'very likely' to succeed: Survey

"If this last year showed us anything, it is that the unexpected can and will happen. You need to prepare."

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Americans want $1.9 million banked, on average, by the time they retire, according to a new study from Charles Schwab. More than half, 53%, of people say they are "very likely" to reach their retirement savings goal.

Researchers at the financial services company surveyed 1,000 adults ages 21 through 70 who are currently using a 401(k) plan to gauge their savings and measure how far they have left to go.

Many of the Schwab respondents think they are on the right track. More than a third, 38%, say they are currently "doing fine" financially, while 53% describe their situation as "pretty good." Meanwhile, almost 3 in 10 believe their lifestyle in retirement will improve.

Those savers have a plan to stash away even more, the study notes. Nearly half, 48%, plan to save more money in general to up their retirement ante, while 36% are specifically aiming to increase their 401(k) contributions.

About 35% will invest more money outside of their workplace retirement accounts, and 34% will focus on paying down debt to free up income.

Fidelity reports "record levels" of retirement savings as of the third quarter of 2021. Still, according to its findings, many savers have a long way to go if they intend to put away nearly $2 million before they leave the workforce: The average 401(k) balance was $126,100.

Getting on the right retirement track means saving what you can

When saving in a 401(k), experts suggest you try contributing 10% to 15% of your monthly income. If that figure seems daunting, start by contributing what you can and aim to scale up over time. It may help to consider automating your contributions to streamline the process.

"Whether it is through automatic salary deferrals to your 401(k) or monthly contributions to investment accounts, automating your savings is a way to make sure" your money grows, says Wesley Botto, a certified financial planner and certified public account in Cincinnati.

"If you have to think about it each month, you may forget."

If you have an employer-sponsored plan, Greg McBride previously told Grow, "you can contribute by a payroll deduction, and your employer oftentimes will match some of the funds that you're putting in, giving you free money." That can effectively double how much you're putting away.

For 2022, the 401(k) contribution limit is $20,500, up from $19,500 last year. Savers ages 50 and older can contribute up to an extra $6,500 in catch-up contributions, for a maximum total contribution of $27,000.

'The unexpected can and will happen,' so prepare

More than one-fifth of Schwab survey participants say they expect that their retirement will be delayed because of Covid, with millennials (currently aged 21-40) and Gen Z (aged 21-24) most concerned.

The setbacks they're worried about include stock market volatility (32%), unexpected expenses (29%), and keeping up with monthly bills (27%). Some people indicated they're held back by the cost of saving or paying for their child's education, or pricey credit card debt.

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What is a 401(k) match and how can you take advantage of it?

Video by Ian Wolsten

Working to save an emergency fund of at least 3 to 6 months' worth of living expenses could serve as a buffer for these tough expenses, experts say, so you don't have to scale back retirement contributions or dig into your future savings.

"The first thing you need to establish is your emergency savings fund, then make sure you get your company match in the retirement plan," says Botto. When it comes to staying on track for your retirement and other financial goals, awareness is your best tool, he adds: "If this last year showed us anything, it is that the unexpected can and will happen. You need to prepare for it."

Feeling more confident in your retirement prospects means you must first assess your goals and obstacles. Check out Grow's retirement calculator to get a target tailored to you.

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