The economic fallout from the coronavirus pandemic has certainly rippled across the nation, making a dent in millions of Americans' personal finances. Yet according to Gallup's annual Economy and Personal Finance survey, soon-to-be retirees are only slightly more concerned about having enough money for retirement — and most still expect to retire at age 66.
You should have saved 10 times your income to retire by age 67 according to retirement-plan providerFidelity Investments. That's in order to continue your current lifestyle in retirement, rather than planning to downsize or spend more in old age.
Those looking to retire earlier, say at age 66, would need to save more than the recommended 10 times their income to make up for the one-year buffer in between.
Fidelity's guideline assumes retirees are no longer working, not even a part-time job. It takes into account yourretirement contributionsand investments, in addition to any cash savings.
But what's surprising is this: Gallup's survey suggests that a greater percentage of seniors are expecting to work a part-time job in retirement due to the coronavirus pandemic. Furthermore, as hopeful retirees brace for the uncertainty ahead, more look to their savings account as another source of income.
The importance of a high-yield savings account
Americans' options for funding their retirement haven't changed much in the last 80 years, with most retirees still relying heavily on their Social Security benefits and 401(k).
Gallup, however, found that there was a recent five-percentage-point increase in non-retirees' expected reliance on their personal savings accounts, from 68% to 73%.
While having a savings account is Finance 101, make sure you keep your cash in a high-yield versus traditional account that is just as stable. With the national average annual yield on standard savings accounts only 0.05%, that's over 16 times less than what the highest-yield savings accounts offer.
For example, take a look at the Varo Savings Account, which offers a higher-than-average annual percentage yield (APY) for all account holders, plus tools to help you save more.
In addition to its uniquely tiered APY program, the online bank offers two programs that automatically transfer money from your Varo bank account to your savings account: Save Your Pay, which transfers a percentage of your paycheck into your savings, and Save Your Change, which rounds up your checking account transactions to the nearest dollar and transfers the difference to your savings.
Varo Savings Account
Bank Account Services are provided by Varo Bank, N.A., Member FDIC.
Annual Percentage Yield (APY)
Begin earning 3.00% APY and qualify to earn 5.00% APY if meet requirements
Minimum balance
$0.01 to earn interest
Monthly fee
None
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
Excessive transactions fee
None
Overdraft fee
None
Offer checking account?
Yes
Offer ATM card?
Yes, if have a Varo Bank Account
Terms apply.
How part-time work can help
While Americans are still depending on the same retirement income sources as they did a year ago, they expect to count a bit more on part-time work.
Gallup reported a six-percentage-point increase, from 64% to 70%, in those expecting to rely on part-time work as a source of retirement income.
As slightly more people say that part-time work will supply some income in their future, consider what gigs you may be interested in picking up as you approach retirement age.
If you are a bookworm, get paid to read. OnlineBookClubpays $5 to $60 for reviews of all sorts of different books. You also don't need to do much to make some side money as you grow older. For those who have a car, rent it out through websites likeHyreCarorTuro. You might as well make money off that asset sitting in your garage or driveway.
As you think about what you'll need to age gracefully, remember that every person's financial situation is different. Some retirees plan to downsize so they can afford a higher quality of life and more vacations, while others prefer the comforts of their familiar home. Ask yourself what you want your retirement years to look like, and put the financial pieces in place early.
That way, you can fully enjoy your well-deserved leisure.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
As a seasoned financial expert with a deep understanding of retirement planning, I bring to the table a wealth of knowledge grounded in both academic research and practical experience. Over the years, I have closely monitored economic trends, especially in the context of major events like the coronavirus pandemic, which has significantly impacted individuals' financial landscapes.
The article touches upon critical aspects of retirement planning, shedding light on the economic fallout from the coronavirus pandemic and its implications on Americans' retirement preparedness. Drawing from Gallup's annual Economy and Personal Finance survey, it emphasizes that soon-to-be retirees, despite the pandemic's disruptions, remain only slightly more concerned about retirement finances, with the majority still expecting to retire at age 66.
The notion that individuals should have saved 10 times their income by age 67, as suggested by retirement-plan provider Fidelity Investments, is a key point. This recommendation aims to ensure a seamless transition into retirement, allowing individuals to maintain their current lifestyle without compromising on financial security.
The article underscores the importance of high-yield savings accounts in the current economic climate. It notes that, despite the traditional reliance on Social Security benefits and 401(k) plans, there has been a recent increase in non-retirees' expected reliance on personal savings accounts. The emphasis on choosing high-yield accounts over traditional ones is grounded in the significant difference in annual yields, with standard savings accounts offering only 0.05%, while high-yield accounts can provide substantially higher returns.
A practical example, the Varo Savings Account, is highlighted for its higher-than-average annual percentage yield (APY) and innovative features such as automatic transfers from checking to savings through programs like Save Your Pay and Save Your Change.
Additionally, the article discusses the evolving trend of retirees considering part-time work as a source of income. Gallup's findings reveal a notable increase in the percentage of individuals expecting to rely on part-time work for retirement income. This shift prompts a discussion on the potential opportunities for part-time work, offering examples such as getting paid to read book reviews or renting out personal assets like cars.
In conclusion, the article emphasizes the need for individuals to carefully plan and adapt their financial strategies in light of changing economic landscapes. It encourages readers to consider their unique financial situations, explore alternative income sources, and proactively plan for a secure and fulfilling retirement.
