If retirees could talk to their younger selves, they’d tell them to save more for their golden years.
“Think about the regret most of our respondents had, was that they didn’t start saving early enough,” Nate Miles, Allspring’s retirement chief, told Yahoo Finance Live of the recent survey of global investment in the US. company on 2,758 near and retired adults.
As a result, many of Allspring’s respondents are considering semi-retirement.
“About 25 percent of them have resigned themselves to working later and retiring later and/or simply expecting less from retirement,” said Miles.
But that’s not always a viable option, according to the survey results. One of the 4 early retirees had an unexpected early retirement due to job loss and health problems.
Instead, workers should focus on saving, Miles said.
It recommends that working people save at least 10% of their income for retirement. Workers can even make up for lost time, if they started saving for retirement later in their career. It just means constantly firing more.
“One of the things that concerned us about the survey was actually that people who didn’t start saving before age 40 were only saving 50 percent of the time at a rate of about 10 percent,” Miles said. “Even when people save later, they’re not actually making up for those 10 or 20 years in terms of the delayed start date.”
Employers can also play a role in helping workers reach their retirement goals through self-enrollment plans. This is when workers are automatically enrolled in their company’s 401(k) when they get started. Some employers also offer automatic increases in contributions each year.
Studies have found that employers with self-enrollment retirement plans have much higher participation rates among their employees.
“For most participants, they lack the commitment or financial literacy to often make the decision that’s best for them. So things like auto-enrollment and auto-escalation will help address some of these issues on their behalf,” Mile said. And we’re seeing more and more plans to add that. With the recent approval of SECURE 2.0, we expect even more participants in employer-sponsored plans will do so.”
Self-enrollment could also help women, who are more concerned with meeting their retirement goals, Miles said. The Allspring survey found that 69% of women are confident their savings will last until retirement compared to 87% of men.
“In general, women are less secure in retirement and generally more anxious. Part of that is that they’re often not in the workforce for their entire career, and so they’re not benefiting from that time saved,” Miles said. “This is an area where the [auto-enrollment plans] it will really help, where we have more and more women in the workforce saving for retirement for longer.”
Ella Vincent is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago
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