For many young individuals, the level of retirement savings they need may not be one of their immediate concerns, even though compiling funds early is recommended. Not having the proper level of funds put away can cause several issues down the line, and learning from those who are struggling in retirement now may help paint a clearer picture.
Only 8 percent of those who have not yet retired think their current standard of living will suffer once in retirement, a report from ING U.S. showed. However, more than 30 percent of currently retired persons are in a position where their standard of living is not the same as before.
In order to prevent this, 80 percent of consumers felt they would rather cut their spending levels now in order to reach a comfortable retirement situation when they reach the age where they no longer have to work, the report noted. Despite this, nearly half of that group thinks they will actually run out of money when trying to retire.
The level of money needed for retirement is another issue that confuses some people. The report added that nearly 35 percent either had no specific understanding of how much money would need to be saved as part of their financial plan, or that a figure less than $500,000 would be sufficient.
Retirement savings levels not at right standard
With many consumers not learning from their older counterparts, there could be some notable gaps in some financial strategies. This may be noticeable in some specific declines in retirement contributions.
According to a report from Bankrate.com, nearly 20 percent of people are saving less than they did in the past. Only 18 percent have tried to contribute more to their retirement accounts in the past few months, while nearly 55 percent have not changed their savings strategy.
“This is troubling considering the availability of catch-up contributions for those 50 and up, as well as the higher 2013 contribution limits for all eligible IRA and 401(k) contributors,” said Greg McBride, senior financial analyst for Bankrate.com.
Young consumers may want to pay special attention to those approaching retirement. The report noted that those who are at least 50 years old, but not yet in retirement, are not saving a proper amount to prepare them for the day they finally stop working.