A majority of Americans are behind when it comes to saving for retirement, according to a new study.
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Roughly 52 percent of Americans said their retirement savings were below the level they should be at, according to a study conducted by Bankrate.com. That’s compared to just 16 percent of respondents who believed they were on track in terms of saving and 11 percent who felt like they were saving more than enough.
The amount that Americans are saving for retirement varies dramatically by income levels. For instance, almost two-thirds of households with an annual income between $30,000 to $49,999 said they aren’t saving enough. That’s compared to 48 percent for households that are earning more than $80,000 annually. About 52 percent of respondents earning less than $30,000 said they are saving enough.
Most concerning is that those nearing retirement aren’t prepared: More than half of people between the ages of 55 and 64 said they’re behind on saving, while 63 percent of those between the ages of 39 to 54 said they’re behind.
“Aim to save at least 10 percent — and ideally 15 percent — of your income specifically for retirement,” said Greg McBridge, Bankrate’s chief financial analyst. “The best time to start is today, and the worst time to start is someday.”
And even though financial experts warn against the practice, nearly half of workers with retirement savings accounts have taken out money before retirement age, including 60 percent of households earning less than $30,000.
“Early withdrawals from your retirement account deals a permanent setback to your retirement planning,” McBride said. “In addition to the taxes and 10 percent early withdrawal penalty you may be subjected to, the money comes out but doesn’t go back in. You don’t get to make higher contributions in subsequent years to make up for what you’d taken out early.”
The most common reason for tapping retirement savings early is unemployment, but it was followed by medical bills or other unplanned expenses. Almost 23 percent of respondents said they dipped into their retirement savings early to repay debt, while 17 percent did so to purchase a home.