Heading into 2024, Americans are still facing headwinds in saving for retirement.
In a recent report for Kiplinger, the Society of Actuaries (SOA) Research Institute shared its takeaways on the growing challenges in preparing for retirement, noting that workers in 2023 faced more roadblocks to save for their long-term future.
The cost of education while allocating for retirement has impeded on savings for many: A past SOA survey found that 63% say their ability to save for another’s college education has been impacted by needing to put money towards retirement.
The resumption of student loan payments has also deterred workers, and even more seasoned ones, from saving towards their retirement.
On top of their day-to-day responsibilities, these respondents are likely to juggle other savings goals, including setting aside money for an emergency fund (92%), traveling (87%), and purchasing a home (68%).
“The challenge of prioritizing different savings goals, including college for family members, has led to families making difficult choices, such as delaying retirement plans,” said R. Dale Hall, FSA, MAAA, CERA, managing director of Research at the SOA Research Institute, in a statement at the time.
For near and current retirees, they may face other financial hardships like major medical events that require longer periods of expensive care or relocation to assisted living facilities.
Make a plan
Along with understanding their own retirement path and goals, workers should have some knowledge regarding their market risk levels, adds the SOA. Not understanding their own investments could leave them ill-prepared during retirement, when they lose the benefit of investing in an employer-sponsored plan.
To offset these concerns, individuals should begin learning about investing and then choose their funds based on their needs, adds the SOA.
Other options include setting a portion of savings to annuities or working with a financial advisor to understand retirement goals.
Additionally, other strategies for those who need to up their savings immediately include reducing housing costs, whether that may be selling or moving into a smaller, less costly home, taking out a reverse mortgage, or moving in with other family. Those who are looking for cheaper health care, and who are eligible, could look into Medicare Advantage plans or Medicaid.
The SOA notes that while individuals could be aware of their lack of planning, it’s integral to encourage continued action. According to past research, over six in 10 of those nearing retirement and seven in 10 retirees had given at least some consideration to their retirement, but only 16% of those nearing it and 27% of retirees felt prepared for their financial future.
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