Retirees often have one major regret: that they did not start saving for retirement early enough. That’s according to Nate Miles, Head of Retirement at Allspring Global Investments, who recently released a report on retirement savings trends.
Miles notes that 30% of people nearing retirement have considered working in retirement, with 25% resigned to working later or expecting less in retirement. The main regret from the study, Miles says, is that many people did not start saving early enough.
Miles also discussed savings targets and how strict one needs to be in terms of reaching those targets. He says that the general rule of thumb is to save as much as possible, with a target of 10% or more being a great place to start, especially if one starts earlier. He also noted that those who didn’t start saving until after 40 were only saving at a rate of 10%, which is roughly equivalent to those who began saving in their 20s and 30s.
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When it comes to Social Security and Medicare benefits, Miles notes that employer-sponsored retirement plans have been trying to make things simpler by implementing things like auto-enrollment and auto-escalation into target date funds. This is because many participants lack the engagement or financial literacy to make the best decisions for themselves. With the recent passing of SECURE 2.0, more participants in employer-sponsored plans are expected to do this.
Miles also noted that while conventional wisdom suggests that many early savers lack engagement or sophistication, more than half of retirees and 56% of near-retirees are self-educated on when to retire, how much income they will need, and the sources of income they will generate from retirement.
Breaking it down by gender, Miles notes that 31% of women are anxious about retirement, compared to 19% of men. Women are generally less confident in retirement and more anxious, partly because they are not in the workforce for the entirety of their careers and do not benefit from that time in savings. However, Miles notes that the use of auto-enrollment and auto-escalation will help to equalize savings for both men and women, regardless of how long they have been in the workforce or the amount they have saved.
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