Statistics reveal a disturbing picture- Americans have extremely low retirement savings. The latter comes to only $120,000 for those between 55 years to 64 years of age. The amount is only 12 percent of the one million dollars recommended by experts. The mentioned figures were mined from the Federal Reserve data. As per Bankrate, which has crunched the data, those who are aged between 65 years and 74 years of age are not doing much better either. The average savings for this age group is in the region of $126,000. This money will soon be exhausted if there is no monthly income.
Quantum of money saved
Most experts hold the opinion that one should have seven times yearly salary by the time the person reaches 55 years of age. It means that those Americans who earn $57,617, the average American income, must have a minimum of $403,318 as savings when they reach 55 years. The number goes up to 10 times the salary at 67 years. This comes to about $576,000 for any person earning the average American income. Respondents of the Bankrate survey showed that only 16 percent of them save about 15 percent of their income. About 25 percent of the respondents save anywhere between 6 percent and 10 percent of the total income. About 21 percent save five percent or even less. Worst of all, approximately 20 percent of the respondents replied that they did not save any money out of their income.
It follows that a comfortable life post retirement could only be had if one invests early. The easiest way to do so is to invest in a 401(k) plan sponsored by the employer. If the employer provides a match, the person actually earns money without doing any work. If the employer does not offer any 401(k) plan, it will be an excellent idea to consider a number of tax-advantaged retirement-oriented funds like traditional IRA or the Roth IRA. It is a good idea to know the different kinds of retirement accounts prior to parking your money at any place.
Monthly expenses can be lowered by moving to a smaller home. Grocery bill can be made smaller. It is a good step to eliminate any debt. If any person has an extra room or space in the house, this can be rented out to generate extra cash. Items can be resold online. Money can also be earned by undertaking freelance work.