Personal finance

52% of Workers Feel They're Behind on Retirement Savings. These Tips Can Help Them Catch Up

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  • Many workers feel they are behind on retirement savings, which has not changed since before Covid-19.
  • It can be tough to make retirement savings a top priority when there are other competing life goals.
  • These tips can help if you feel you've fallen behind.
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Many Americans are having a crisis of confidence when it comes to whether their savings will meet their retirement goals.

To that point, 52% of working Americans feel they are behind on their retirement savings, according to a new survey from

They may be on to something. There's a $4 trillion difference between the retirement savings workers will need and what they have actually accumulated, T. Rowe Price estimates.

Perhaps surprisingly, workers' insecurity around retirement savings has not changed much since 2019, before the Covid-19 pandemic hit, according to Greg McBride, chief financial analyst at Bankrate.

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Admittedly, there are many obstacles that can stand in their way if they want to save more. These can range from lack of access to a retirement savings plan at work to fulfilling other financial goals, like saving for big-ticket items such as a family home or a child's college college education, or paying down debts like mortgages, credit cards or student loans.

Even so, experts say there are steps you can take now that will help boost your retirement savings long-term.

Kick up your savings rate

It can be tough to know how much is enough when it comes to your retirement savings rate.

"We tend to advocate for a 15% deferral rate, and that includes both the employee and the employer contribution," said Lorie Latham, senior defined contribution strategist at T. Rowe Price, during the firm's 2022 retirement outlook panel this week.

That may come as a surprise to some workers, considering that automatic enrollment rates can be as low as 3% or less, if those plans also have automatic annual increases, according to Vanguard.

Experts generally recommend contributing enough to at least get an employer match, if one is available. Keep in mind, too, that you will need to save even more if you're also investing on behalf of your spouse.

Of course, obstacles can get in the way.

Bankrate's survey found 39% of workers are saving as much toward retirement as they were before the pandemic, about 24% are saving more and 14% are saving less. The remaining 23% are not contributing.

Those who are socking away less money cited reasons such as loss of income, with 49%; extra expenses, 32%; additional debt, 21%; the desire to have more cash available, 19%; or helping family members financially, 14%.

However, increasing your retirement savings deferral rates, even if just a little as you earn raises or promotions, can have a big impact on your total savings over time, according to McBride.

"The habit of increasing the amount that you're putting away can go a long way," McBride said.

Invest in an IRA if your employer doesn't offer a plan

One of the key reasons many workers don't save more is because they do not have access to a retirement savings plan at work.

Just 64% of private industry workers have access to a defined contribution plan like a 401(k) plan, according to T. Rowe Price.

So long as you or your spouse have earned income, you can open up an individual retirement account on your own and save that way, McBride said.

For younger workers, the opportunity to save in a Roth IRA with money they've already paid taxes on could enable them to earn decades of compounded growth, he said.

There are limits to how much you can put away each year through either 401(k) or IRA plans.

In 2022, workers can save an extra $1,000 in their 401(k) plans for a total of up to $20,500. The limit for traditional and Roth IRAs will stay the same at $6,000.

If you're age 50 or over, you can put away even more through catch-up contributions — an extra $6,500 for 401(k) accounts and another $1,000 for IRAs.

Consider working a year or two longer

If you're near retirement age, another strategy to consider is working longer.

Even a year or two of extra income can help bolster your financial retirement security, McBride said.

The reason: It's more time you have to save and let your assets grow and less time that your money has to support you in retirement.

Delay claiming Social Security benefits

Working longer can also help you delay claiming Social Security, which can significantly boost your eventual monthly retirement benefit checks.

Eligible workers can first claim retirement benefits at 62, but will have reduced benefits for life.

By waiting until full retirement age — generally 66 or 67 — they will receive 100% of the benefits they earned. And for every year they wait until age 70, their benefits go up even more.

The difference between claiming at age 62 and 70 can be as much as 77%.

"You basically get a permanent pay raise every year you're able to delay taking Social Security from age 62 to age 70," McBride said.


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