Enough With The Retirement Talk!

Copyright: pinkomelet

Almost every time I look at my computer these days, I’ll see at least one featured article on Yahoo! which discusses retirement.  I’m not exaggerating when I say it happens almost daily, and it’s making me mental.  

I know the population is aging, and that baby boomers and GenX’ers are trying to prepare and plan for their golden years, but this is getting ridiculous.  The media and the internet have unabashedly latched onto the subject, and now there is a constant barrage of anxiety-provoking articles with headlines and titles such as: 

Do you have what you will need to retire?

Are you prepared for your golden years? 

Beware of the pitfalls of investing in an IRA

Watch out for these “retirement killers” 

I’ll read one article which sets me at ease, because I am on track with what it says I need to do.  Then the next day I’ll read an article which either contradicts what I read the previous day, or which has such a doomsday vibe that it basically states that almost everyone is in danger of not having enough money to ever retire.  Does this mean that we will all be living under freeway overpasses, eating dog food?  

Honestly, all these articles seem to do is to stir up worry which affects how I function throughout the day.  And though I can try to let it go, the next day another article will appear which will wash away my feelings of security and accomplishment regarding my retirement portfolio.   

Who else has noticed this trend?

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Understanding The Costs Of Diabetes Treatment And Planning For The Future

Original post can be found at:
https://www.thesimpledollar.com/understanding-the-costs-of-diabetes-treatment-and-planning-for-the-future/


by DeVonne Goode
Updated on 06.05.18

Diabetes is a prevalent disease. However, it can still take many by surprise, and leave them struggling to pay medical bills.
With the complexities of the condition and the wide range of costs involved with treatment, having a financing plan is necessary. Health insurance is obviously one of the primary methods of assistance. But not everyone has the adequate coverage to cover
the costs – let alone the out-of-pocket cash to put on the counter every time out.

Opening a savings account, particularly one with high interest, could be a worthwhile investment toward consistently managing the disease today and into the future.

Diabetes at a glance
Type 1 Diabetes

A condition that keeps the body from producing enough insulin. Insulin shots are used to control blood glucose levels. Most diagnosis occur among children and young adults, which is why it is also referred to as juvenile diabetes.

Type 2 Diabetes

The most common form of the condition where the body doesn’t properly use insulin to convert sugar, starches and other food into energy.

Gestational Diabetes

Occurs when women experience high blood glucose levels during pregnancy. It’s usually easily managed and goes away after pregnancy.
Prediabetes

When blood glucose levels are higher than normal, but not high enough to be diagnosed as Type 2 diabetes. A large number of Americans are living with prediabetes (1 out of 3 adults). But taking early action to manage glucose levels can prevent diabetes from forming.

People who have diabetes are at higher risk of developing the following health conditions:
Blindness
Heart disease
Stroke
Kidney failure
Blindness
Loss of lower appendages (toes, feet, or legs)

Keep in mind – these conditions occur in the case of severe complications with the disease. With consistent attention to diet and other medical treatments (like most living with type 1 or type 2 diabetes undergo), these conditions are avoidable.
Diabetes by the numbers

According to a recent report from the Centers for Disease Control and Prevention (CDC), more than 100 million U.S. adults are now living with diabetes or prediabetes. Of that, only 12% were aware that they had it. And with approximately 1.5 million new cases being diagnosed every year, the need for education and financial support is clear.

Prevalence
Infogram

Rates of diagnosis for the following ethnic groups
7.4% of non-Hispanic whites
8.0% of Asian Americans
12.1% of Hispanics
12.7% of non-Hispanic blacks
15.1% of American Indians/Alaskan Natives
Breakdown among Asian Americans:
4.3% diagnosed were Chinese
8.9% diagnosed were Filipinos
11.2% diagnosed were Asian Indians
8.5% diagnosed were identified as other Asian Americans
Breakdown among Hispanic adults:
8.5% diagnosed were Central and South Americans
9.0% diagnosed were Cubans
13.8% diagnosed were Mexican Americans
12.0% diagnosed were Puerto Ricans

Underreported deaths due to diabetes

Diabetes is one of the leading causes of death in the United States (seventh as of 2015). However, studies have found that it is also among the most underreported. According to the American Diabetes Association®, only 35% of people who died with diabetes had the disease listed on their death certificate. And of that number, only 10% had diabetes identified as the cause of death.

Underreported Deaths
Infogram

There are a number of possible reasons for the underreported rate. But a lot points to the lack of ability to pay for adequate diagnosis and proper medical treatment.

What specific costs will someone with diabetes have to address?

If you or your child are diagnosed with diabetes, or you’re told that you have prediabetes, management and prevention take center stage. While a lot involves diet and exercise, medication will inevitably have an effect on your finances as well.

According to the American Diabetes Association® (ADA), medical costs for a person with diabetes averages out to $16,750 per year (a total of $327 billion nationwide in 2017). Of that amount, $9,601 is attributed to treatment specifically for diabetes. That’s more than twice the medical cost for people without diabetes.

Of the $327 billion nationally, $237 billion was attributed to direct diabetes medical costs and $90 billion was attributed to indirect costs – absenteeism and reduced productivity at work. Understanding the different forms of diabetes treatment, as well as the direct and indirect costs, is important for wrapping your head around plans for financing.


Type
Treatments

Type 1 Diabetes
Diet
Exercise
Insulin therapy
Regular blood glucose tests/monitoring

Type 2 Diabetes
Diet
Exercise
Insulin therapy
Other medication
Gestational Diabetes
Diet
Exercise
Monitoring sugar intake
Monitoring the baby
Direct Medical Costs ($9,601/year)
Indirect Medical Costs ($90 billion nationally)
Prescription medication (30% of total cost)
Loss of productivity due to mortality ($20 billion nationally)
Hospital care (30% of total cost)
Inability to work as a result of diabetes ($40 billion nationally)
Routine doctor’s office visits (15% of total cost)
Reduced productivity while at work ($30 billion)
Other medications and supplies (25% of total cost)
Reduced productivity due to increased absences and loss of employment from diabetes ($6 billion)

Insulin

Insulin injections are one of the primary forms of medical treatment used to manage diabetes. Especially for those living with type 1 diabetes, who can’t produce insulin of their own, these types of injections are vital for survival. However, the cost for insulin has skyrocketed in recent years, leaving many in the position of having to choose between going into debt or cutting back on medication.

Average cost for insulin as of 2015: $100-$200 per month
Average cost for insulin as of 2018: $400-$500 per month

WIDELY USED INSULIN BRANDS AND INSULIN INJECTION TOOLS
Insulin
Apidra, Humulin, Lantuo, Lente, Levemin, Novolog, Novolin, NPH Insulin, Regular Iletin, Regular Insulin, Velosulin
Insulin Syringes
BD Ultrafine, Levemir®, Monoject, NovoFine®, Ulticare, UniFine, UltiGaurd
Insulin Pumps
Animas, Deltec, Medtronic

Diabetes screenings and other medications

Along with your normal doctor’s visits, diabetes screenings are an important part of the process for identifying the disease. Specifically, if you have been diagnosed, testing your blood glucose levels will become a regular part of your life. Much of the costs for medications involved should be covered by your health insurance. And there are a number of home testing devices you can invest in to help make things more convenient and cost-effective.


WIDELY USED DIABETES TESTING BRANDS AND OTHER MEDICATIONS

Blood Glucose Test Meters and Test Strips
Abbott Freestyle®, Abbott Flash, Accu-Chek Compact®, Ascensia Elite, Ascencia Breeze, Ascensia Contour, Lifescan One-Touch©, Prestige
Injectable Medications
Byetta (Exenatide) injection and Symlin (Pramlintide Acetate) injection, Victoza (lLiraglutide- rDNA origin) injection
Oral Medications
Acarbose, Avandia, Chlorpropamide, Diabinese, Glipizide, Glucophage, Glucotrol, Gylset, Meglitol, Metformin, Prandin, Precose, Repaglinide, Rosiglitazone (These drugs act in different ways to lower blood glucose levels and may be prescribed in combination with other medication.)


Diabetes health expenditures according to group

Depending on whether you or your child has type 1 or type 2 diabetes, total expenditures can vary. Those who manage their condition at home, through diet, exercise, and home testing will have different averages than those needing regular appointments with specialists. According to the American Diabetes Association®, average total healthcare expenditures for diabetes treatment differ according to gender, race, and states with the highest populations of people diagnosed.

Gender
Men: $10,060
Women: $9,110

Race
Hispanics: $8,050
Non-hispanic Blacks: $10,470
Non-hispanic Whites: $9,800
States with highest population of people with diabetes
New York: $21 billion in healthcare expenditures
Florida: $24 billion in healthcare expenditures
Texas $25 billion in healthcare expenditures
California: $39 billion in healthcare expenditures

Options for diabetes treatment financing

In a recent online survey of 500 adults with diabetes, more than half of the participants acknowledged the medical costs involved has had a negative impact on their finances. Many also admitted to going to “extreme lengths” to cover the costs. These lengths include accruing credit card debt, borrowing money from family or friends, and tapping into a savings or retirement account. Many may feel the need to take some extra financial risks because they don’t feel as supported as they’d like. Understanding your options will help you make the most informed choices.

Insurance

Government insurance, such as Medicare and Medicaid provides most of the financial assistance for diabetes care. The military also takes care of a good amount of costs for veterans. The remainder of the cost is covered by private insurance or out-of-pocket cash. According to the National Conference of State Legislatures, 46 states mandate that diabetes be covered under state insurance.

Diabetes Health Insurance Coverage
Infogram

These states require coverage for diabetes treatment as well as equipment and supplies for home use (insulin, pumps, syringes, test meters). Four states do not have that same insurance mandate, however – Ohio, Alabama, North Dakota, and Idaho. Anyone with diabetes who live in any of those four states will most likely need to deal with a private insurer or explore other methods of financing.

Coverage from private insurers usually come through employer-sponsored group plans or individual health plans. Advisors would suggest going with employer-sponsored plans, because they offer higher protections due to being subsidized. On the other hand, if you are unemployed and venturing into the individual market, it may be difficult to find affordable coverage. The reason is that diabetes is considered a “high risk” disease. Insurance companies anticipate a high amount of claims, especially from those with pre-existing conditions. So it will be reflected in the pricing.

HSA

People who have diabetes but don’t have coverage that’s comprehensible enough for their needs may utilize a health savings account (HSA). An HSA is primarily useful for people with high deductibles (at least $1,350 individually, or $2,700 for family). Also, those who are a part of low-income families or don’t live in a “mandate state” may see this as a helpful tool. One big benefit of an HSA is that you take the money with you. There’s no “use it or lose it” policy like some other savings plans. Being able to set aside pre-taxed dollars to help pay for medical expenses can go along way when trying to manage diabetes.

FSA

Another way to set aside dollars for medical expenses is through a flexible spending account (FSA). An FSA is provided through your employer with a $2,650 limit. You can also use it to cover medical expenses for your spouse and dependents. One thing to keep in mind with FSA’s is that they do have an expiration period. You’re generally required to use the funds within your plan year. But your employer may offer extensions at their choosing. The benefit is, it can be used with any type of health plan. And diabetic supplies are eligible to be paid through FSA’s.

High interest savings account

If you’re not interested in dealing with your employer for coverage or a flexible spending account, a high interest savings account could be a good option to explore. It’s just like any other savings account, only with fewer restrictions. Not only are you saving for your medical needs, but your money is also making money. High interest savings accounts are opened through online banks – which means they don’t have to worry about maintaining branches all over the country. They can offer you higher interest rates, with the benefit of accessing your money whenever you want.

Unlike an HSA, a high interest savings account isn’t tied to a high deductible health plan with a dollar limit. And unlike an FSA, there’s no expiration date on when you can use your money. It removes any additional stress so you can concentrate on managing your condition properly. And as you earn interest, you can still take advantage of a number of outreach resources available for people with diabetes.

This condition can be a tough one to get a handle on, but it’s not insurmountable. Let your understanding of diabetes, your knowledge of its treatments, and your strategy for tackling costs work in your favor.

Why Long-Term Care Coverage Is Vital

The chances of you being in a position in which you can no longer take care of yourself are staggering. Seventy percent of people over the age of 5 will need some type of long-term care at some point, with 20 percent of them requiring it for a period of more than five years. If you have disability insurance, that doesn’t cover long-term care. I have heard some people grumble about the cost of long-term care insurance, which averages about $2,000 for a healthy, single 55-year old. The policy I have had in place since 2004 has premiums which will total $2,700 for 2017, and the premiums will increase to almost $2,900 next year. However, that’s a fraction of what I would have to pay if I didn’t have the insurance. The Genworth (the company I have my policy under) 2016 Cost of Care Survey reported that median annual cost of an assisted living facility is almost $44,000, and the median monthly cost of a private nursing home room is over $90,000.

I signed up for my policy shortly after my mother suffered from, and survived, a brain aneurysm in 2004. She was in a skilled nursing facility from 2006 until 2013, then was transferred into an assisted living facility. In a way, luck was on her side, because she had no financial resources and qualified for Medicaid and Medicare. She is now a participant in the ALW program. However, the bulk of her monthly Social Security benefit (less than $1,200) goes to the facility in which she resides. In no way was I willing to take the chance of relying on a government agency to rescue me in my elderly years if I find myself in need of long-term care.

I HIGHLY recommend securing long-term care insurance if you are over the age of 30. You cannot rely on the government to come to your aid if you end up requiring long-term care, and it’s unfair of you to expect loved ones to carry the financial burden of your care.

Living Solely On Social Security

I just ran across an article which I was compelled to share. This should serve as a major wake-up call for those of you who assume that you will be able to support yourselves completely with Social Security benefits when you become old enough to draw those benefits. I have included the link to the article, as well as copied and pasted the body of Barbara Friedberg’s article here.

The sad reality is that though the person in this example is able to make ends meet with her Social Security check, people who live in cities like Los Angeles will probably spend the bulk of their Social Security check on rent alone, with very little money left for groceries and healthcare.

Regardless of where you live, put money aside for retirement so that you don’t find yourself in a precarious financial situation when you are older. Roth IRA’s are an excellent way to set aside funds for your retirement, and they grow tax-free over the years.

https://www.gobankingrates.com/retirement/buy-average-social-security-check/

By Barbara Friedberg | September 26, 2016

Somewhere, an older American — let’s call her Alison — is going to retire soon. She anticipates a Social Security check of $1,349.59, the national average as of July. She regrets not saving more for retirement, but has accepted the reality of her situation.

If you’re like Alison — facing retirement without a cash cushion — you’re in good company. In January, GOBankingRates.com surveyed a representative sample of Americans and found that among people 60 and older, just 26 percent felt they were financially on track for retirement. The remaining 74 percent within this age group lacked sufficient retirement savings. And among Americans of all age groups, a sobering 33 percent had nothing saved for retirement.

Anyone who tries to get by on Social Security income faces a lean retirement lifestyle. Here are questions to ask yourself before trying to stretch benefits as far as possible — and what you’ll realistically be able to afford.

1. How Much Home Can You Afford on Social Security?

Your Social Security check will stretch further if you find a cheap place to retire. Housing is the biggest expense most Americans face, according to BLS statistics.

Sun-loving Alison hopes to retire to an apartment in Tucson, Ariz. The median rent for a one-bedroom apartment is $575, according to Zillow. But let’s say Alison lucks out and finds an apartment for $540. She will spend 40 percent of her check on rent and will need to kick in a few extra bucks for utilities. So, rounding up, her monthly housing cost to $600 — leaving her with $749.59 of her Social Security check.

2. What Can You Eat on Social Security?

Dining at four-star restaurants is out if you’re living on Social Security. On average, roughly 12.5 percent of a consumer unit’s spending money goes toward food. In Phoenix — close enough to Tucson for our purposes — the average family spent $594 per month to eat in 2013-14, the most recent figures available from the BLS.

Phoenix averages 2.6 members per household, so we can estimate that the average person spends $228 per month to eat. Although Alison can splurge occasionally at a modest restaurant, living on Social Security means she will be eating at home most of the time.

Add up housing costs of $600 and $228 for food, and Alison is left with $521.59 of her Social Security check — a small sum for the remaining spending categories.

3. Can You Afford Healthcare on Social Security?

Alison might qualify for assistance in paying for her Medicare Part B premiums. Such aid would help her cover medical expenses, the No. 1 financial burden in the U.S. According to the government’s Medicare website, Alison’s monthly $1,349.59 check is beneath the income ceiling of $1,357 that qualifies her for assistance.

Medicare assistance benefits vary by state, so Alison should visit Medicare.gov and sign up for a conversation with someone from her state.

It will help if Alison can find ways to save on healthcare costs, such as purchasing generic drugs and using walk-in clinics instead of visiting emergency rooms. Assuming Alison qualifies for government help and is diligent about her medical spending, she can budget $150 per month toward medical costs. Alison now has $371.59 left in her budget.

4. What Type of Transportation Can You Afford While on Social Security?

Owning a car is expensive, especially on Social Security. The cost of operating a car can easily run into hundreds of dollars a month. With that price tag in mind, Alison has joined many other retirees by giving up her car.

Alison relies on public transportation services to get to doctor appointments. When going to the grocery store or meeting with friends, Alison uses the bus. On rare occasions, she splurges for a cab. She chose an apartment located near shops and restaurants. As long as her health holds out, she can walk to the grocery store and pharmacy.

Alison keeps transportation costs low at $100 per month. So, she’s now down to $271.59.

5. Can You Afford to Travel on Social Security?

After paying for necessities, Alison has $271.59 left for extras, which we describe in the next two categories. As you can already see, it is not easy to live on the average Social Security check.

With a tight budget, Alison and other retirees living on Social Security aren’t going on lavish vacations. Maybe Alison can afford a train or bus ticket to visit family, but cruises are out.

If travel is important to you, there are ways to squeeze it into the budget. Pairing up with family and friends can make travel a possibility. Camping vacations in state parks are economical. There are also many free events across the country.

6. Will You Earn Enough in Social Security to Cover Other Costs?

Remember, after spending for necessities, Alison was left with just $271.59 in her monthly budget. The amount of money she can spend in this final category — which includes entertainment — will largely depend on how much cash she earmarks for travel. She might be able to afford the occasional $1 movie at Redbox, but it’s unlikely she’ll be able to pay for the newest iPhone 7.

Finally, Alison will need a small cash cushion to cover emergencies. If she’s especially frugal, she might even have a little money left over to give to her favorite charity.

While Alison can make ends meet on her Social Security check, it won’t be easy. So, if you are a little younger than Alison, try to learn from her mistakes. Save a bit more today so you will have a greater sense of financial security in retirement.

What Do You Take For Granted?

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Chances are that you probably take many things in your life for granted. For example, you probably take for granted that you will wake up to face another morning. You may take for granted that you have job security or financial security. You may take your good health for granted, or you may have resigned yourself to sub-optimal health while taking for granted that you will somehow overcome the inevitable consequence of poorly managed illness. You may take your relationship or marriage for granted, assuming that because you have a partner whom you love and who presumably loves you back, you will never be alone or have to struggle with being single again. You may take for granted that your home is completely safe from violence, thieves, or natural disasters.

Never, EVER take anything you have in your life for granted. Anything can be stripped away from you in a heartbeat. The saying, “hope for the best, but prepare for the worst” has some utility in reminding us to pay attention and take steps to ensure our comfort, our safety, our health, our sanity. Nothing we have is permanent. It’s all on loan until we move on from this physical realm.

I know this sounds depressing, but it isn’t meant to be. It is simply a reminder to pay attention to what you are blessed with, to appreciate it, and to realize that just because you enjoy it and it has given you comfort or joy, doesn’t mean that it will last. Don’t count on it. Live every day as if it was your last.

White Rice

white rice
Anyone who grew up in a household which was managed on a shoestring budget can relate to the concept of adding an inexpensive, bulky carbohydrate to meals to increase their volume. My entire childhood was punctuated by the ubiquitous presence of glutinous Japanese sticky rice. In fact, the only times I did not consume white rice with dinner were when my mom decided to heat up Stouffer’s Macaroni and Cheese, Stouffer’s Lasagna, or pot pies (Swanson and Banquet were the two brands she bought…she ended up purhcasing whatever was on sale). When we had the mac and cheese or the lasagna, we would split the dinner, and she would serve frozen veggies on the side.

All of our other meals featured a mound of white rice which occupied the majority of the plate’s surface. If we had broiled hot dogs, there was rice. Scrambled eggs and rice. Broiled chicken and rice. Vienna sausage and rice. Pan fried SPAM and rice. The occasional steak or lamb chop treat and rice. Sukiyaki (one of only two dishes my mother knew how to cook) and rice. Meatloaf (the other dish my mom could make from scratch) and rice. I even had Campbell’s soup with rice, and was so accustomed to eating soup with rice, that I was always thrown off when I would go to a classmate’s house and encounter soup being served as a precursor to the main course, not the actual main course, and sans rice.

Despite the fact that I was raised in a very low income household, and ate processed foods almost constantly, I was a very happy child and never felt that I was being deprived. I was more astonished and disgusted by the ultra wealthy children I went to school with, because I thought they lived in a false world, one which was based almost exclusively on possessions and financial wealth. A number of my classmates were pretentious, unpleasant brats who were so brainwashed with a sense of entitlement that they probably got kicked around by life when they had to navigate through it on their own.

White rice was such an important part of my life that once I moved out of my mom’s as an adult, I quickly got a rice cooker. I was so unhappy with the small Hitachi cooker I got, that I almost ran cartwheels when someone gifted me with an 8-cup National cooker (that cooker is still with me, almost 30 years later). For those of you who are Japanese, you can probably relate to that need to have a National, Tiger, or Zojirushi cooker! The nicest Zojirushi rice cookers are quite fancy now, as you can see here:

zojirushi fancy

And yes, I still covet a Zojirushi rice cooker!

Now that I am very carb conscious, I avoid white rice on most days, but there are carb spike days in which I allow myself to indulge in jasmine white rice. Why? Because white rice is one of my main comfort foods. It ties me to my Japanese heritage, and it reminds me of my humble upbringing.

1 in 3 Americans Has $0 Saved for Retirement

I recently came across this article and was shocked by the statistics. In an effort to make people aware of the importance of saving for retirement, I am reposting Elyssa Kirkham’s article below.

To see the original article, please go to: http://www.gobankingrates.com/retirement/1-3-americans-0-saved-retirement/

main_overall
By Elyssa Kirkham March 14, 2016

Saving for retirement is not an area of financial strength for Americans. Too often, meeting the financial demands of today means delaying, diminishing or simply never starting to save for tomorrow.

“There are plenty of obstacles Americans claim are in their way when it comes to saving for retirement: credit card debt, student loan debt, low wages, the need to save for a child’s college education, and the list goes on,” said Cameron Huddleston, Life + Money columnist for GOBankingRates. “Although all of these things can put a strain on our budgets, they don’t necessarily make it impossible to save for retirement.”

GOBankingRates asked Americans how much money they have saved for retirement and found that most people are behind on their retirement savings. These survey findings also provide a helpful benchmark against which readers can compare their own retirement savings balances and progress.

Survey: How Much Americans Have Saved for Retirement

The GOBankingRates survey was conducted as three Google Consumer Surveys, each targeted at one of three age groups: millennials, Generation Xers, and baby boomers and seniors. Each age group was asked the same question, “By your best estimate, how much money do you have saved for retirement?” Respondents could select one of the options as displayed below:

Less than $10K
$10K to $49K
$50K to $99K
$100K to $199K
$200 to $299K
$300K or more
I don’t have retirement savings.

GOBankingRates analyzed the survey results to reveal key insights into how Americans of all ages are saving for retirement. Whether due to various economic factors or not correctly prioritizing finances, many people are not on track to have enough money to cover their expenses during retirement.

56% of Americans Have Less Than $10,000 Saved for Retirement
Most Americans are falling short of the amount of savings required for a comfortable retirement ― if they are saving at all. The most common responses to the question of what people have saved for retirement across all age groups are “I don’t have retirement savings” and “less than $10K,” breaking down as follows:

One-third of Americans report they have no retirement savings.
23 percent have less than $10,000 saved.
Survey: 1 in 3 People Has $0 Saved for Retirement

This lack of savings indicates that just getting started on retirement planning is a significant obstacle for many people. This difficulty can be due to a lack of education on the importance of retirement savings, said Kristen Bonner, the GOBankingRates research lead for this survey. “Americans might also be feeling as though their employer match ― or lack of ― is not enough to make it worth it to open an account, as well the growing trend of changing jobs every couple years and not wanting to deal with rolling over funds from one account to another,” Bonner said.

It’s not all bad news, however:

After “less than $10K,” the most common balance Americans have saved for retirement is “$300K or more.”
A significant 13 percent of Americans’ retirement savings balances are in the top bracket.
“The fact that so many Americans do have $300,000 or more saved for retirement goes to show just how easily the amount of money in your retirement fund can grow over time if you are dedicated to contributing regularly,” Bonner said.


Women More Likely Than Men to Have No Retirement Savings

The gap between men’s and women’s retirement savings is cause for concern for anyone planning for retirement. It’s as much as 26 percent, according to the 2015 Gender Pay Gap in Financial Wellness report from financial education company Financial Finesse. Overall, GOBankingRates’ survey findings show that women are significantly less likely to be sufficiently saving for retirement:

Women are 27 percent more likely than men to say they have no retirement savings.
Two-thirds of women (63 percent) say they have no savings or less than $10,000 in retirement savings, compared with just over half (52 percent) of men.
Survey: Retirement Savings Gap Reveals How Far Behind Women Are

The gap between men’s and women’s retirement savings widens as balances get higher: Whereas men and women are about as likely to have $10,000 to $99,000 saved for retirement, men are twice as likely as women to have savings balances of $200,000 or more.

One reason women fall behind is the gender pay gap. “Women cannot save as much for retirement because they are not earning as much,” Bonner said, citing 2015 U.S. Census Bureau data that shows women earned $0.79 for every $1 men earned in full-time positions. Families trying to prepare for retirement need to factor such deficits into their financial plans.

“Women also are more likely to have gaps in employment to raise children and might not be contributing to retirement accounts during those periods when they’re not working,” Huddleston said.

Women’s retirement savings needs are also greater than men’s. “Women not only need to catch up with men but they also need to save more because their medical costs tend to be higher in retirement,” Huddleston said. Women are also more likely to live longer, increasing their chances of outliving retirement funds.

To make up for anemic earnings and plan for their higher retirement costs, women need to be proactive and save aggressively. “Financial experts typically recommend saving 10 percent to 15 percent of your annual pay, so women should aim for that higher percentage to close the retirement savings gap,” Huddleston said.

Retirement Savings Correlate Closely to Age

Retirement savings are closely tied to savers’ stages of life. For young people just starting their careers, simply saving at all could be a sufficient goal, while those nearing retirement will likely want to have at least a few hundred thousands of dollars in their retirement accounts.

GOBankingRates conducted this survey in three different parts aimed at specific generational age ranges ― millennials ages 18 to 34, Gen Xers ages 35 to 54, and baby boomers and seniors ages 55 and over ― to get an accurate picture of how Americans’ savings differ by life stage:

Millennials are 40 percent more likely to not have retirement savings than Gen Xers and 50 percent more likely than people age 55 and over.
About half of Gen X is making a significant effort to save for retirement ― 48.2 percent have saved over $10,000, including 26.7 percent who have saved $100,000 or more.
Boomers and seniors are 85 percent more likely than Gen Xers to have $300,000 or more in retirement accounts and 4.6 times more likely than millennials to have saved this amount.
Survey: Comparison of How Much Millennials, Gen Xers, Boomer and Seniors Have Saved for Retirement

3 of 5 Millennials Have Started a Retirement Fund
As the youngest group surveyed, millennials are the least likely to have substantial retirement savings. Three in four (72 percent) of millennials have saved less than $10,000 or nothing at all.

Survey: Majority of Millennials Are Saving for Retirement

Additional findings show how millennials’ retirement savings reflect their life stage:

42 percent of millennials indicated they have no retirement savings.
The number of millennials with no retirement savings yet is 52 percent for younger millennials ages 18 to 24 but a more reasonable 36 percent for older millennials ages 25 to 34.
The most common balances that younger millennials have saved are “less than $10K,” at 30 percent, and “$10K to $49K,” at 11 percent.
Older millennials are twice as likely as younger millennials to have saved $10,000 to $49,000, at 14 percent versus 7 percent, respectively.
Related: Retirement Planning Checklist for Millennials

Overall, fewer millennials are saving for retirement than should be, but many millennials’ retirement savings are actually on track, especially among the those ages 25 to 34. For this group, saving now and saving regularly will make all the difference.

“The earlier you start saving, the easier it is ― really,” Huddleston said. “Thanks to the power of compounding, if you start regularly setting aside even small amounts as soon as you start working, you could easily have enough for a comfortable retirement.”

Saving as little as 5 percent of your income can make a big difference long term, Bonner added. “Make sure to always take advantage of any employer matches, and automatically transfer funds from your paycheck to your retirement fund so that you do not even think of that money as disposable income,” she said.

Gen X Still Playing Catch-Up on Retirement After Great Recession
Survey: Most Gen Xers Are Behind on Retirement Savings

Although some Gen Xers are hitting their retirement savings goals, just over half (52 percent) still have less than $10,000 in retirement savings. A big contributor to this low amount could be the Great Recession, which hit Gen X the hardest, costing members of this generation 45 percent of their net wealth on average, according to The Fiscal Times. This loss was a major setback for a generation that is saddled with a wide range of financial obligations, from mortgages to aging parents and children entering adulthood.

Younger Gen Xers are falling further behind on retirement savings than their older counterparts, who are twice as likely to have retirement savings with high balances:

Both younger Gen Xers (ages 35 to 44) and older Gen Xers (45 to 54) are equally as likely to not have a retirement account, at 31 percent.
Among younger Gen Xers who have a retirement account, most have lower balances of less than $50,000.
Older Gen Xers’ balances reflect good starting contributions that could earn considerable compound interest over time:

An impressive 40 percent of older Gen Xers have managed to save $50,000 or more in retirement accounts.
Over half of those older Gen Xers in that 40 percent have balances of $200,000 to $299,000 (7 percent) or $300,000 or more (15 percent).
“These figures are encouraging,” Huddleston said, “but this generation still could be setting aside a lot more if they actually want to have a comfortable retirement.”

Only 1 in 4 People Age 55 and Over Has More Than $300K Saved
As respondents get older, the gap between the savers and the save-nots widens. Although a larger portion of people age 55 and over report high-balance retirement funds, there remains a significant subgroup that has little to no retirement savings:

About 3 in 10 of respondents age 55 and over have no retirement savings.
26 percent report retirement savings with balances of under $50,000, an amount that is insufficient for people nearing retirement age.
Over half (54 percent) of people age 55 and over have balances far behind typical retirement fund benchmarks for their age group.
Survey: Nearly 30% of Boomers and Seniors Have No Retirement Savings

Some of those 55 and over who lack savings might not need them, Huddleston pointed out. “[They] might be among the dwindling group of Americans who will get a pension and will benefit from having an employer who set aside retirement funds for them.”

More likely, however, those without retirement savings couldn’t or didn’t make saving for retirement a financial priority. “Without savings of their own, they’ll have to rely solely on Social Security,” Huddleston said. Baby boomers most often cited Social Security as their expected primary source of retirement income (35 percent), according to a 2015 report from the Transamerica Center for Retirement Studies, whereas Gen Xers and millennials expected retirement accounts like 401ks or IRAs to be their main source of retirement income.

On the other end of the spectrum, many baby boomers and seniors have successfully socked away substantial savings in retirement accounts:

26 percent of baby boomers nearing retirement (ages 55 to 64) report healthy retirement savings with balances of $200,000 or more.
31 percent of seniors at or above the retirement age (65 and over) have balances of $200,000 or more.
“Those who have saved more than $300,000 have clearly made saving for retirement a priority and want a more comfortable lifestyle in retirement than what Social Security benefits will afford them,” Huddleston said.

About 75% of Americans Over 40 Are Behind on Saving for Retirement
Using this survey data as a snapshot of Americans’ retirement savings progress ― or lack thereof ― GOBankingRates sought to get a better look at how many people are actually on track to retire comfortably. To do so, GOBankingRates compared survey responses to key retirement savings benchmarks based on a savings rate of 5 percent of income and checkpoints sourced from J.P. Morgan Asset Management, as well as Census Bureau data on median incomes by age range. Based on those data sets, GOBankingRates determined that people of the following ages, representative of the survey age groups, are on track or behind at the following rates:

Age Median Income Retirement Savings Benchmark Percentage on Track Percentage Behind
24 $34,605 Started a retirement fund 48% 52%
30 $54,243 $16,272.90 33% 67%
40 $66,693 $100,039.50 20% 80%
50 $70,832 $212,496.00 22% 78%
60 $60,580 $260,494.00 26% 74%

A little less than half of people ages 18 to 24 are on track simply by having started a retirement fund. Among the people just a few years ahead of them, around age 30, significantly more ― two-thirds ― are already behind on saving for retirement.

Younger people are in the best position to recover if they’ve fallen behind because they have more time to use compound interest to their advantage. “Those who are in their 20s and 30s with $10,000 or less in retirement savings still have time to catch up if they make saving a priority,” Huddleston said.

For those age 40 and over, however, the picture is bleaker: Among those in their 40s and 50s, four in five savers have balances that fall behind the benchmarks for their age groups, which means only about 20 percent are on track for retirement. Among those 60 and over, about a quarter have sufficient retirement savings, but the other 74 percent are still behind.

“The real problem is procrastination,” Huddleston said. “People naturally tend to focus on the bills that are due today ― and the things they want now ― and assume they’ll have time to save for retirement later. But, before you know it, 20 or 30 years have passed; you’re approaching retirement age but you don’t have enough saved to retire.”

How to Catch Up If You’re Behind on Retirement Savings

With less time to save as each year passes, these older age groups need to reevaluate their financial priorities. The large majority of Americans age 40 and over who are behind on retirement savings can potentially catch up or compensate for their anemic retirement accounts by making changes to their savings plans now.

1. Stick to a Routine
The first step is to start saving regularly. Consistent savings, even in just small amounts, is the best way to ensure a retirement fund is growing. “Day to day, it might not seem as if the balance in your 401k or IRA is increasing significantly, but 10, 20, 30 years from now, your future self will be thanking you,” Bonner said.

If money is put into high-yield accounts or invested wisely, compound interest on small savings can help produce a sizable nest egg. “If you wait until you’re 40 or so to start saving, you’d have to save three or four times as much ― or more ― each month to accumulate the same amount as those who start saving earlier,” Huddleston said.

2. Prioritize Changes That Have Long-Term Benefits
Upping retirement savings contributions is also necessary to catch up. People age 50 and over can make catch-up contributions of $6,000 to a traditional 401k, for example, in addition to the regular $18,000 annual 401k contribution limit, according to the IRS.

Those nearing retirement can also help prepare for retirement by reducing spending and paying down debt, which will trim monthly expenses and enable them to stretch their savings further once they retire.

3. Save Like You’ll Retire Tomorrow
Lastly, those nearing retirement might need to adjust their expectations, Huddleston said. “Older Americans with little saved will have to work a lot harder to set aside more and likely will have to work longer ― or never fully retire,” she said.

Many Americans do not recognize retirement savings should be an urgent priority in their lives, according to Bonner. “The trending attitude today is to ‘enjoy life to the fullest,’” she said. “However, even though retirement seems far away to many people, and they think that there is still plenty of time to begin saving, Americans must make their future selves a priority and take all necessary steps to set themselves up for a comfortable financial future.”

People who view retirement as something that is just around the corner can help themselves stay on top of their retirement contributions so that they don’t fall behind. By keeping retirement at the top of the financial priority list, it can become less of a far-off dream and more of a soon-to-be reality.