If retirees could talk to their younger selves, they would tell them to save more for their golden years.
“We think about the regrets that most of our survey respondents had, it was that they did not start saving early enough,” Nate Miles, Allspring’s head of retirement, told Yahoo Finance Live about the company’s recent global investment survey of 2,758 adults near and in retirement.
As a result, many of Allspring’s respondents are considering semi-retirement.
“About 25% of them have resigned to either working later and retiring at a later date and/or just expecting less in retirement,” Miles said.
But that’s not always a viable option, according to the survey results. One of 4 early retirees had an unexpected early retirement due to job loss and health issues.
Instead, workers should focus on saving, Miles said.
He recommends workers save at least 10% of their income for retirement. Workers can even make up for lost time, if they started saving for retirement later in their careers. It just means consistently socking away more.
“One of the things that concerned us about the survey actually was that people that didn’t start saving until after 40 were only saving 50% of the time at about a 10% rate,” Miles said. “Even when people are saving later, they’re not actually making up for those 10 or 20 years in terms of that delayed start date.”
Employers also can play a role in helping workers meet their retirement goals through auto-enrollment plans. That’s when workers are automatically enrolled in their company’s 401(k) when they start. Some employers also offer automatic increases of contributions every year.
Studies have found that employers with auto-enrollment retirement plans have much higher rates of participation among their employees.
“For the majority of participants, they either lack the engagement or financial literacy to make often times the best decision for them. So things like auto-enrollment and auto-escalation will help resolve some of those issues on their behalf,” Mile said. “And we’re seeing more and more plans add that. With the recent passing of SECURE 2.0, we expect that even more participants in employer-sponsored plans will do that.”
Auto-enrollment could also help women, who are more apprehensive about reaching their retirement goals, Miles said. The Allspring survey found that 69% of women are confident about their savings lasting through retirement compared with 87% of men.
“Generally, women are less confident in retirement and generally more anxious. Part of that is they oftentimes are not in the workforce for the entirety of their career, and so they’re not benefiting from that time in savings,” Miles said. “This is one area where the [auto-enrollment plans] will really help, where we’re going to get more and more women in the workforce actually saving for retirement for longer.”
Ella Vincent is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago
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