Fly On Wall Street

Don’t Let Retirement Spook You

With Halloween just in our rearview mirror, it’s not too late to unveil some scary retirement stats. My hope? That you’ll be spooked into making positive money moves before your future sneaks up on you.

The scary truth: According to the August 2021 Federal Retirement Thrift Investment Board meeting minutes, only 73% of Blended Retirement System TSP active-duty participants were contributing the 5% to the Thrift Savings Plan necessary to get the full match. That means nearly a third are leaving free money on the table.

The scary truth: Each year for the last couple of decades, the Employee Benefit Research Institute has conducted what it calls a Retirement Confidence survey. In 2021, only 27% of respondents were “very confident” that they would have enough money to “live comfortably throughout their retirement years.”

The scary truth: Throughout the pandemic, I applauded the boost to the savings rate tracked by the Bureau of Economic Analysis. However, it’s gotten worse in recent months. The most recent number tracking at 7.5%. Retirement is just one savings goal, but there are probably a lot of others, and 7.5% is not likely to get the job done.

The scary truth: According to the Boston College Center for Retirement Research’s January 2021 National Retirement Risk Index update, 49% of working households are at risk of a reduction of lifestyle when they retire. That was an improvement from the original research, but still not a good-news story.

The scary truth: Speaking of maintaining your lifestyle in retirement, how far would $1,543 take you? That’s the average Social Security retirement benefit in 2021. You’ll probably need a lot more.

The scary truth: Employer retirement plans like the 401(k), or the military’s Thrift Savings Plan, are a mainstay for retirement saving. A June 2021 report by Vanguard Investments pegged the average account balance of participants at $129,157.

Spooked into action? I hope so.

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