Portfolio At Risk: 36% of Investors Face Shortfall, Study Finds

A recent study by the Investment Company Institute (ICI) found that 36% of investors are at risk of falling short of their retirement savings goals. The study analyzed the retirement savings of over 10,000 households and found that the median household has only saved $135,000 for retirement. This is far less than the $1 million that most experts recommend.

The study also found that the gap between the amount of money that people have saved and the amount of money that they need to retire is growing. In 2007, the median household had saved $100,000 for retirement. By 2017, that number had only increased to $135,000.

There are a number of factors that are contributing to this problem. One factor is the rising cost of living. Healthcare and housing costs have been rising steadily in recent years, making it more difficult for people to save for retirement.

Another factor is the decline in the value of traditional pension plans. In the past, many people relied on their employer-sponsored pension plans to provide them with a secure retirement income. However, these plans have become less common in recent years, and many of the plans that do exist are underfunded.

As a result, more and more people are being forced to rely on their own savings to fund their retirement. This is a daunting task, especially for those who are nearing retirement age.

Why It Matters

There are a number of reasons why it is important to save for retirement. First, it can help you to maintain your standard of living after you stop working. Second, it can help you to cover unexpected expenses, such as medical bills or long-term care costs. Third, it can help you to leave a legacy for your loved ones.

Benefits of Saving for Retirement

There are a number of benefits to saving for retirement. These benefits include:

• Tax savings: Many retirement savings plans offer tax benefits. For example, contributions to traditional IRAs and 401(k) plans are tax-deductible. This means that you can reduce your current tax bill by saving for retirement.
• Investment growth: Retirement savings plans typically offer investment options that can help you to grow your money over time. This growth can help you to reach your retirement savings goals faster.
• Financial security: Saving for retirement can help you to achieve financial security in your later years. It can give you peace of mind knowing that you have the resources to cover your expenses and live comfortably in retirement.

How to Save for Retirement

There are a number of ways to save for retirement. Some of the most common methods include:

• Contributing to a 401(k) or 403(b) plan: These plans are offered by many employers. They allow you to save money on a pre-tax basis.
• Contributing to an IRA: IRAs are individual retirement accounts that you can open at a bank or brokerage firm. They offer tax-advantaged savings.
• Investing in a Roth IRA or Roth 401(k): These plans allow you to save money on an after-tax basis. This means that you do not get a tax deduction for your contributions. However, you can withdraw your money tax-free in retirement.
• Saving in a taxable brokerage account: This is a more traditional savings account that does not offer any tax benefits. However, it allows you to invest your money in a variety of assets, such as stocks, bonds, and mutual funds.

The best way to save for retirement is to start early and save as much as you can afford. The sooner you start saving, the more time your money has to grow. And the more you save, the more money you will have in retirement.

Conclusion

Saving for retirement is one of the most important things that you can do for your financial future. It can help you to maintain your standard of living, cover unexpected expenses, and leave a legacy for your loved ones. There are a number of ways to save for retirement, so find a method that works for you and start saving today.

Tables

Table 1: Retirement Savings by Age

Table 2: Retirement Savings Goals

Table 3: Tax Benefits of Retirement Savings Plans

Table 4: Pros and Cons of Different Retirement Savings Plans