Most Americans do not have enough money left for retirement. While you may believe that this is only the problem of middle-class and low-wage workers, a report from the New School states that it is not. Even wealthy Americans are greatly lacking in saving the necessary funds for their later years.
Millions of high-income people are still struggling to save enough
According to the New School, 27% of workers with incomes exceeding the Social Security wage base limit have no retirement savings. The wage base range is $ 137,700 in 2020, so this means that a quarter of the six figure-earning workers are not able to invest any money for the future.
Other high earners are also not necessarily flush with retirement cash. In fact, among workers with incomes above $ 137,700, who have retirement investments, the estimated average amount for those 65 years of age is only $ 252,000. This will only last for two years if they maintain their standard of living in retirement.
Sadly, for high-income people, Social Security replaces a smaller portion of pre-retirement income than it is for low-income workers because the benefits formula is progressive.
This means that high-earning Americans are likely to experience a greater decline in their standard of living if they retire without sufficient funds in the bank.
Saving for retirement is a challenge for all
If your income is not above $ 137,700, you may have a difficult time feeling sorry for those who earn so much but still cannot save.
However, the reality is that people who earn income above the social security wage base threshold can do Still struggling to complete. Many live in high-cost areas because these high-wage jobs are often concentrated there. Increasing spending as income increases is also a natural human tendency. Often, as long as people feel they are getting above their head, they are committed to obligations that are difficult to eliminate.
The challenges faced by high incomes also underscore the difficulties low and middle income workers face. After all, if people who earn more than $ 137,000 per year still can’t save, what chance do those who earn less have?
But this is a challenge that needs to be overcome
No matter what your income level is, the reality is that you need retirement savings because you cannot live on Social Security alone – and you have to find a way to do so.
The first step to do this is to find out where you currently stand and where you need to end up. Starting from:
- Tracking expenses to see where your money is going.
- Setting a retirement savings goal.
- Creating a budget that prioritizes enough investment to hit your goal.
When you make your budget and consider retirement savings as paying bills, you can see that you need to spend elsewhere. You may find that there are changes made by you, especially if you are earning six figures. Sometimes, these modifications mean larger lifestyle shifts, such as opting for a cheaper used car or making your home smaller. But be open to them, because saving for retirement is something you should absolutely do.
And if you find that you can’t get a veal room to save for retirement, other options, such as working overtime, finding side gigs, or doing some career development, should be on the table.
Not denying these steps will be a major challenge, especially if you have less than 27% of high-income people who are not able to put together any retirement savings. But it is worth getting up to ensure a safe retirement for you