We've all seen the generic blanket advice, laid out like a cookie cutout to be read by countless eyes. Usually told very matter of fact, as something you should have known. "By the age of 30, you should have an entire year of salary put away in savings."
Fidelity has a nice summary of this what-you-"should"-be-saving advice:
Personally, this is the first time I heard this advice. Considering I'm hearing it a week before my 30th birthday is not very reassuring! 😅
I believe we should all make an effort to save what we can towards our retirement. The more we save today, the less we'll have to worry in the future. If you can meet these benchmarks to save for retirement, that's wonderful! But the reality of being able to keep up with these retirement savings goals is not that doable for everyone.
For starters, the 2015 National Compensation Survey only 56% of employers actually offer 401k accounts as a benefit to employees. Of the employers who do offer a 401k plan, 49% do not offer any matching. With roughly 50% of employers actually offering 401k accounts to their employees and only 50% of those employers matching, the burden of retirement savings is primarily on your shoulders.
Let's say you make $50,000 a year
By this logic you should have $50,000 in savings by the time you're 30 and then $100,000 by 35! Let's assume that you were able to put away that much in savings by 30.
You continue to make $50,000 a year and somehow are able to save an additional $50,000 in 5 years? That's $10,000 per year, $834 per month, or $193 per week.
This commitment is every year, until you retire. Whenever you get a pay raise, you should increase your amount to catch up to your new goals.
Considering that only 40% of Americans have $1,000 to cover an emergency, this is a very aggressive savings goal for the remaining 60%. It's probably an aggressive goal even for some of the 40% that do have $1,000 to cover an emergency.
So what do you do?
Don't fall into the trap of thinking that you don't have enough to save, so you'll forgo all of the savings. If you can save $25 per paycheck and you get paid twice a month, that is $600 that you will have at the end of the year that you didn't have before.
If your employer doesn't offer a 401k account, you can open an IRA account. These accounts are meant to supplement retirement savings for people who aren't offered 401k accounts through their employer or are self-employed.
Consider alternative ways to supplement your retirement, like long-term care insurance. Long-term care insurance is meant to assist with costs not covered by Medicare or Medicaid like in-home assistance or assisted living.
There are different ways to prepare for your retirement and it's always good to have diversity in your saving efforts. This is a good way to make sure you're not "putting all of your eggs into one basket."
Most importantly, don't let the hard set advice scare you into thinking you're behind or you're not doing what you're supposed to be doing. Instead, asses where you are today and make a list of realistic goals you can work towards this year.
Maybe these goals can be working towards opening an IRA account and putting down a minimum deposit required. This will already put you further ahead than you were at the beginning of the year and puts you on a path towards building retirement savings.
You can save for your retirement. If it fits your budget and you make a point of working towards your goals, you'll find it can be fun and extremely satisfying to know you are taking care of your future self. So start today!