Having a strong financial strategy for retirement is on the minds of many Americans, but when it comes to how much people should be putting away, the answer can be quite unclear.
Close to half of Americans are on their way to achieving a retirement that will meet their goals, but nearly 45 percent of that group think that saving 10 percent of their annual earnings will be enough, according to a report from Country Financial. However, it is important to not only save a portion of a person’s earnings, but also get involved in a retirement portfolio that involves a pension and 401(k), as well as Social Security.
Despite this, 30 percent of men polled felt that they would think saving that much money alone would be enough to have the retirement they desire, the report explained. Another 18 percent of women explained the same.
Close to 45 percent of Americans explained they felt that creating a savings plan for their child’s education was more of a priority than saving money for retirement, the report showed. Approximately one-tenth of Americans were on the fence about this idea. However, this may not be a good idea.
“You can borrow for college, but not for your retirement,” said Troy Frerichs, director of investments and wealth management at Country Financial. “As a rule of thumb, retirement savings should come first, however we often see Americans putting the priority on education expenses.”
Less than 40 percent of those polled were able to identify the differences between a Roth IRA and a standard IRA option, the report added. Nearly one-third were unable to do this, while 30 percent did not know the difference.
Long-term care also important in retirement
While many Americans may be confused about how much to save for retirement, they may also not be keeping in mind the need to prepare for the possibility of long-term care. According to a report from Northwestern Mutual, more than 40 percent of Americans are not looking to take care of their long-term care savings needs, or do not know how to go about it.
“People are living longer, so the need for care is very real,” said Steve Sperka, vice president of long-term care for Northwestern Mutual. “Planning ahead and putting solutions in place for potential care needs gives families options and helps protect retirement nest eggs.”