Some people may think saving for retirement is unrealistic. Try retirement itself if not planned for properly.
Almost three-quarters of baby boomers expect to delay retirement, according to housing nonprofit organization The NHP Foundation survey of 1,000 non-retired Americans 50 and older. Why? They didn’t budget for unforeseen health-related expenses, and expected Social Security income to make up half of their monthly income. They also have unrealistic expectations about the retirement they hope to have, said Dick Burns, president and chief executive officer of the NHP Foundation. “We believe there is a rude awakening for those who haven’t reckoned realistically with the future,” Burns said.
See: A midlife career change doesn’t have to be drastic — just a more fun version of your current life
One of the most unrealistic goals of those who responded to the survey may be the preference to continue living in their current homes. The majority — 85% — of respondents said they wanted to age in place, even though 76% of those who say they rent or have a mortgage have no retirement budget or intend to rely on Social Security for half of their income. Still, 83% said they believe they’ll be able to age in place. That may not be possible, Burns said, especially if they still have a mortgage payment. Some may have to find affordable rental housing instead, even if they’d rather own, Burns added.
Saving — or investing — for retirement is not easy for many Americans. A MarketWatch article recently shared on Twitter sparked a lot of discussion when it cited a Fidelity Investments study saying 35-year-olds should have twice their salary stashed away for retirement.
Among the reasons people objected to the benchmark included crippling debt, medical emergencies, caring for loved ones and other personal struggles. There are plenty other situations that deter people from saving from retirement, according to a GoBankingRates survey, such as focusing on more immediate goals (like paying for a wedding, having kids, or those kids’ educations), not knowing how much they’ll need in retirement and assuming they can catch up later.
Other reasons for lackluster savings included:
• Already using their retirement savings for an emergency (nearly 22% of respondents said they had no retirement savings because of a financial emergency, according to the GoBankingRates survey).
• Feeling comfortable withdrawing from a 401(k). This is a viable option, but individuals must be careful to pay back any loans or else they may risk receiving a penalty of 10% or more.
• Not having access to employer-sponsored retirement plans.
• Low earnings. Some people, especially those who responded to MarketWatch’s story about saving for retirement in your 30s said they just didn’t have the income to allow themselves to pay for rent or a mortgage, food and necessities and live their lives.
Also see: How to save twice your salary (or more) by age 35
Of course, the sooner people begin saving and investing for retirement, the better.
“We also know that for many, it isn’t always possible to save or invest meaningful amounts of money,” Burns said. In that scenario, it may be best for people — especially baby boomers nearing those retirement years — to seek multiple sources of income, such as a side hustle. Single individuals may also consider having roommates. “For some who find themselves strapped in their golden years, it may be necessary to be more creative with resources,” Burns said.