Americans, behind in the race to build retirement savings, take steps to catch up
Many people's nest eggs have been undernourished. (Photo: Getty Images)
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Thirty-seven percent of millennials point to housing costs as the biggest factor. Many young adults prefer to live in expensive downtown areas.
Partly as a result of the obstacles, 28% of boomers, 18% of millennials and 16% of Gen Xers have maxed out their 401(k) contributions, the survey shows.
Downsize, dial back, brew your own
Households are prepared to make trade-offs to get back on track. Forty-three percent of Gen Xers and 41% of boomers are most likely to downsize homes. Among boomers, 53% say they would brew coffee at home and 42% would take more modest vacations. Forty-one percent of millennials say they’ll dial back on going out with friends.
Telese Williams, 49, of Atlanta, who does installation and repair for a heating and air conditioning company, has $40,000 in a 401(k) account that she amassed during her 15 years with the company. In prior maintenance jobs, “I wasn’t thinking about it,” Williams says, largely because retirement was decades away.
Now, she says, “I am behind on my retirement savings, but I’m catching up.”
Williams started her own home repair business on the side, canceled her cable in favor of streaming media players and began contributing to a supplementary retirement fund. Williams hopes to retire at 60, though she realizes she may need to keep working until 63.
Forty-six percent of Gen Xers surveyed say they’ll close any shortfalls in their nest egg by working longer. Millennials (28%) are more likely to take on a side hustle. Boomers (44%) say they’ll spend less.
Sixty-seven percent of those surveyed would prefer to cut back on spending once they retire rather than tighten their belts while they’re working, the survey shows. Three out of four say they’d prefer to work part-time in their golden years rather than push back retirement.
Overall, 71% of boomers, 62% of millennials and 52% of Gen Xers are confident they’ll be able to retire by 65 or earlier. Fifty-eight percent of all Americans say $1 million is enough for a comfortable retirement.
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Can I give up the grind?
Some worry they won’t be able to give up the grind at all.
Kathy Espinoza, 48, of Manteca, California, has no retirement savings. She works as the manager for a company that sells surveillance cameras but has no 401(k) benefits.
“It’s really hard to put away any kind of money with the increased cost of rent and the increased cost of food,” especially in California, she says. “The only thing that’s not going up is your paycheck.”
Espinoza worries she won’t be able to retire but plans to get a job with a 401(k) plan to try to make up ground.