A significant number of Americans express regret over not initiating their retirement savings earlier, as well as about taking early withdrawals from their retirement accounts. This finding comes from a recent survey conducted by Censuswide on behalf of Human Interest, which involved 1,041 full-time American workers who are not self-employed. The study revealed that 41% of participants anticipate having to postpone their retirement plans due to financial constraints.
Furthermore, 83% of respondents indicated their intention to maintain employment post-retirement. A prevalent concern among respondents was the late start in saving, with 68% wishing they had begun this journey sooner. Notably, 19% reported that they only began saving when they reached the age of 41 or older.
Additionally, 37% of those surveyed admitted to withdrawing funds from their retirement accounts. Among these, 17% borrowed against their 401(k), while 23% made early withdrawals. Eddy Jurgielewicz, a partner and financial planner at Upbeat Wealth based in New Orleans, recognizes the hurdles young professionals face in perceiving ‘retirement’ as a far-off goal.
“When the next year is uncertain, contemplating saving for something that is 30 years away can seem unrealistic,” he stated. Young individuals often juggle various financial responsibilities like student loans and emergency savings. Carman Kubanda, a financial planner at Innovative Wealth Building in California, Maryland, observes that clients frequently prioritize immediate desires over their long-term necessities.
In several cases, individuals might allocate funds for their children’s college education before securing their retirement savings. Cultural influences and behavioral tendencies can also hinder saving strategies, as Uziel Gomez, founder of Primeros Financial in Los Angeles, notes that a large number of Gen Z clients often favor instant gratification over the prospect of saving for the future.
For first-generation Americans, navigating unfamiliar retirement options can be particularly challenging.
Facing Regrets Over Postponed Retirement Contributions
Experts, however, are unanimous in their belief that it’s never too late to begin saving.
Anna Sergunina, the president and CEO of MainStreet Financial Planning in Los Gatos, California, advocates for overcoming present bias, which is the inclination to favor immediate desires. She highlights the necessity of beginning savings efforts at any age. Similarly, Marc Fowler, the director of retirement education at Human Interest, points out the advantages of using catch-up contributions to enhance retirement savings.
This option permits individuals aged 50 and above to increase their annual contributions by up to $7,500. Financial education is crucial in equipping individuals to make knowledgeable decisions regarding their retirement plans. The survey indicated that when employers offer financial wellness education, a remarkable 91% of employees choose to enroll in their company-sponsored plans.
In contrast, this rate plummets to 76% without such educational support. Thus, proactive communication and guidance from employers can significantly enhance employees’ readiness for retirement. John R.
Power, a CFP with Power Plans in Walpole, Massachusetts, emphasizes the importance of employers providing at least the full match for retirement contributions. He also highlights the advantages of automatic enrollment with opt-out options. By delivering comprehensive financial planning services, employers can greatly influence their employees’ preparedness for retirement.
Additionally, educating employees about the importance of early and consistent saving proves invaluable. In an age where employee benefits are becoming increasingly comprehensive, supplying resources for financial planning can be crucial.
The essential message is to begin saving at the earliest opportunity, utilize employer resources effectively, and seek professional financial guidance to successfully navigate retirement planning complexities.
