Are you saving enough for retirement? Fidelity’s tally of 401(k) millionaires just hit an all-time high. Yet the Economic Policy Institute warns the median retirement savings for families with wage-earners aged 44 to 49 is just $6,200. If that low number sounds more like you than Fidelity’s eye-popping savers, keep your chin up. It’s never too late to start putting aside money.
The older and poorer you are, the more folks will tell you the road is hard. Maybe the naysayers have you convinced saving is futile. But while it might be more challenging, if you save and invest well, using a 401(k) or IRA, you can still build a retirement nest egg.
Here are the stories of people who my firm’s 401(k) division helped overcome savings shortfalls:
The reliable partners
Early in their careers, this couple compared their employers’ 401(k) plans and found that one offered a better employer match. So, for 15 years, they maxed out that plan but didn’t save in the other. That one account grew nicely. But so did their expenses and projected costs. With the average American retirement now costing more than $703,000, one partner discovered they would need to save more than the individual 401(k) contribution limit, currently $18,500 a year. So, they finally started contributing to that neglected account.
If your household’s retirement needs exceed your partner’s savings, start contributing to your own retirement account ASAP. Even if you’re in your 40s, with a few decades until retirement, you should have enough time to reap stocks’ long-term rewards big time.
The competent juggler
This husband had saved only $3,000 in their 401(k) by age 53 but was about to ramp up savings. Unfortunately, his wife became ineligible for critical monthly disability benefits, zapping a huge chunk of their income. They considered delaying saving to cover their short-term needs.
If something similar happens to you, review the numbers with a financial pro — who should know exactly how to use a calculator with adjustable variables to show how different savings rates or investment returns could affect your long-term account balance. An adviser who has your interests at heart can help you manage your income, expenses and future needs within your budget. You don’t have to — and shouldn’t — abandon your goal of a secure retirement.
The fashionably late
This family leader hit age 62, the very cusp of retirement age, with just $2,000 in their 401(k). For their whole career, they were handed a “wine list” of funds. Yet they never received any basic education on how various retirement investments could work for them, so they chose not to invest. They had also never been part of a conversation about how and why to prioritize saving.
Sadly, this is a common tale among Baby Boomers. While Boomers have more average wealth than any generation ever, a National Bureau of Economic Research study shows those lacking financial education are even worse off than their forebears. Boomers with even a little financial know-how are more likely to be retirement-ready.
But our fashionably late saver wasn’t deterred. Surprised by the power of a 401(k) to grow their savings late in life, they started contributing. So can you. If you’re starting in your 60s, take every step to max out your tax-deferred savings. Those over age 50 can contribute $6,000 more to a 401(k) than the normal limit. Make short-term sacrifices, if necessary and feasible, to hit the maximum contribution. Features such as employer matching can make your savings grow even faster, giving you a small-but-mighty nest egg that can grow into an income source by your late 60s, 70s and beyond.
So don’t let negative nellies or short-term distractions keep you from saving. Take the first steps to a secure retirement today.
Ken Fisher is the founder and executive chairman of Fisher Investments, author of 11 books, four of which were "New York Times" bestsellers, and is No. 200 on the Forbes 400 list of richest Americans. Follow him on Twitter @KennethLFisher
The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.