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Retirement preparation is a crucial aspect of financial planning, but it can also be a source of stress for many Americans. The thought of saving enough money to live comfortably during their golden years can seem insurmountable. So it is also not surprising that many people feel overwhelmed and unsure about where to begin when it comes to planning for retirement.
With increasing life expectancies and rising healthcare costs, retirement planning is becoming more crucial. It is essential to ensure that adequate savings are in place to support retirement lifestyles. This blog will delve into the relevant statistics and obstacles surrounding retirement planning. It will also offer strategies to help individuals start their journey toward a financially secure retirement.
Retirement Planning in Numbers: Trends and Data
The COVID-19 pandemic has raised concerns about retirement savings, with many people experiencing financial instability or losing their jobs. However, recent data shows even more surprising trends. The 2022 Planning and Progress Study by Northwestern Mutual revealed that 62% of U.S. adults recognize that their financial planning needs improvement. Yet, only 35% of Americans work and coordinate with a financial advisor.
One particularly alarming finding from the study is that 40 million households in the United States have no retirement savings. This significant number highlights the urgency of starting retirement planning as early as possible. Even modest contributions can accumulate over time and grow into a substantial retirement fund, ensuring a comfortable lifestyle in old age.
The study also found that 22% of Americans saved less than $5,000 for retirement, while only 16% saved $200,000 or more. These statistics underscore the need for increased awareness and action regarding retirement planning. Additionally, over 40% of Americans are not ready for retirement, and almost half fear that Social Security may not continue.
A third of Americans also indicated they might live to be 100 years old, and the same percentage fear outliving their savings. Yet, despite these concerns, more than a third of respondents have not taken any proactive measures to address them.
The Ideal Saving Benchmarks for Pre-Retirement Ages
Many people use rough estimates when making financial decisions. Financial firms have responded to this by creating benchmarks that indicate the appropriate amount of savings for individuals of different ages based on their income. While they should not be used as a substitute for thorough financial planning, they can help determine whether one’s savings are adequate.
Finding the right savings benchmark can be a balancing act. Setting a target that’s both achievable and realistic is essential. If the standard is too low, individuals may feel they have accomplished their financial goals prematurely and stop saving. Conversely, if it is set too high, people may not even bother trying, leading to missed opportunities for monetary growth.
Retirement savings can vary based on personal situations, but there are some general guidelines to consider. Fidelity research suggests saving one year’s salary by age 30 and three times that amount by age 40. Then, keeping six times by age 50, eight times by age 60, and ten times by retirement is advised. These estimates assume saving 15% of income starting at age 25, investing at least half in stocks, and planning for a retirement age of 67.
When individuals get closer to retirement age, they have a clearer understanding of their desired retirement lifestyle and its financial requirements. For example, some may want to travel frequently or buy a vacation home, which would demand a larger retirement fund. On the other hand, some may prefer a more modest retirement lifestyle, requiring fewer savings.
The Benefits of Working With a Fiduciary Advisor
Managing finances and planning for retirement can be extremely daunting. That is why it is crucial to work with a professional advisor. However, before delving into the benefits of working with a fiduciary advisor, let’s differentiate it from a financial advisor.
A financial advisor is a trained professional who advises and assists clients on various financial planning aspects. These may include estate planning, tax planning, investment management, and retirement planning. In contrast, a fiduciary advisor is a specific financial advisor legally bound to act solely in their client’s best interests.
They are subject to higher accountability than other advisors, such as those who follow the suitability standard. As part of this accountability, they must disclose any possible conflicts of interest and prioritize their client’s goals and needs above their own.
Here are several advantages of working closely with fiduciary advisors in achieving retirement goals:
Fiduciary advisors are legally obligated to disclose all potential impartiality and undue influences to their clients, providing complete transparency in their business practices. This means clients can trust that their advice is solely based on their financial goals. It is not influenced by any incentives or commissions the advisor may receive to recommend certain products or services.
Expertise and Experience
Fiduciary advisors have an in-depth knowledge of the financial planning landscape due to their specialized training and certifications. They also frequently stay up to date with industry trends, regulations, and best practices. This enables them to offer their clients the most current advice and helps them easily navigate the ever-changing financial landscape.
They are required by law to exercise extreme caution when handling their clients’ investments and savings. Therefore, they thoroughly assess the risks involved in any financial activities and offer recommendations that align with their client’s risk tolerance. This approach enables individuals to navigate the complex retirement landscape and make well-informed decisions.
In the context of retirement savings, fiduciary advisors are committed to continually monitoring their client’s financial plans. This means that they do not just give advice and then disappear. Instead, they take responsibility for ensuring that their clients’ investments match their financial goals. If any adjustments need to be made to the plan, they will provide recommendations and work with their clients to implement them. This helps ensure that their retirement savings remain on track.
Secure Your Financial Future with Hudock Capital Group
Evaluating whether your savings measure up to the average can help you understand where you stand financially and where you need to make adjustments. So take control of your retirement savings today and start working towards the financially secure future you deserve!
If you are looking for a trusted wealth partner who can help you achieve your financial goals, look no further than Hudock Capital Group! Our highly principled approach to investing with purpose sets us apart from other advisors. Our team of client-focused professionals has nearly 300 years of combined experience in the investment business. We will take the time to understand your unique goals and dreams and dedicate our expertise and resources to help you realize them.
Call us at (570) 326-9500 to start planning your financial future with purpose!