According to a recent WalletHub survey, over a quarter of Americans’ top financial fear is not having enough money saved for retirement. On average, Americans believe they need around $1.2 million to retire comfortably, based on Northwestern Mutual’s 2023 study. However, the median balance in the U.S. last year was only $27,376.
Starting to save for retirement early on is crucial. Even small contributions can grow over time due to compounding interest. CNBC calculated that for someone earning $80,000 annually, the needed monthly savings to retire with $1.5 million at age 67 vary depending on the return rate and when savings begin.
It is estimated that if you start at 21, earning a 3% annual return, you would need to save $1,260 per month. While starting at 25 would require saving $1,485 per month, and starting at 30 would mean saving $1,843 per month.
Instead of focusing on an intimidating overall retirement savings goal, it’s recommended to increase one’s savings rate to 15%, inclusive of an employer’s match if available. Starting at a lower rate and increasing it gradually each year is more feasible to reach this target, says Ann Dowd, vice president at Fidelity.
In an effort to save more and plan for retirement, Fidelity’s November Viewpoints report advises taking small steps now to pave the way for bigger strides later. Fidelity will be hosting a virtual Your Money event and is offering free registration for anyone interested.
Making small steps to increase savings and plan for retirement is more achievable and can lead to larger strides in the future. Fidelity’s upcoming virtual Your Money event is offering free registration and is set to feature experts such as Jim Cramer, Ben McKenzie, and Farnoosh Torabi. These experts will share insights on how to boost finances, invest for the future, and navigate high inflation.