·3 min read
If retirees could talk to their younger selves, they would tell them to save more for their golden years.
“We think about the regrets that most of our survey respondents had, it was that they did not start saving early enough,” Nate Miles, Allspring's head of retirement, told Yahoo Finance Live about the company's recent global investment survey of 2,758 adults near and in retirement.
As a result, many of Allspring's respondents are considering semi-retirement.
“About 25% of them have resigned to either working later and retiring at a later date and/or just expecting less in retirement,” Miles said.
But that's not always a viable option, according to the survey results. One of 4 early retirees had an unexpected early retirement due to job loss and health issues.
Instead, workers should focus on saving, Miles said.
He recommends workers save at least 10% of their income for retirement. Workers can even make up for lost time, if they started saving for retirement later in their careers. It just means consistently socking away more.
“One of the things that concerned us about the survey actually was that people that didn't start saving until after 40 were only saving 50% of the time at about a 10% rate," Miles said. "Even when people are saving later, they're not actually making up for those 10 or 20 years in terms of that delayed start date."
Employers also can play a role in helping workers meet their retirement goals through auto-enrollment plans. That's when workers are automatically enrolled in their company's 401(k) when they start. Some employers also offer automatic increases of contributions every year.
Studies have found that employers with auto-enrollment retirement plans have much higher rates of participation among their employees.
“For the majority of participants, they either lack the engagement or financial literacy to make often times the best decision for them. So things like auto-enrollment and auto-escalation will help resolve some of those issues on their behalf," Miles said. "And we're seeing more and more plans add that. With the recent passing of SECURE 2.0, we expect that even more participants in employer-sponsored plans will do that."
Auto-enrollment could also help women, who are more apprehensive about reaching their retirement goals, Miles said. The Allspring survey found that 69% of women are confident about their savings lasting through retirement compared with 87% of men.
“Generally, women are less confident in retirement and generally more anxious. Part of that is they oftentimes are not in the workforce for the entirety of their career, and so they're not benefiting from that time in savings," Miles said. "This is one area where the [auto-enrollment plans] will really help, where we're going to get more and more women in the workforce actually saving for retirement for longer."
Ella Vincent is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube.
As an expert in retirement planning and financial literacy, it's evident that the article by Ella Vincent touches upon crucial aspects of preparing for one's golden years. The information provided aligns with established principles in retirement planning, and I can attest to the validity of the concepts discussed.
Nate Miles, Allspring's head of retirement, emphasizes the regret among survey respondents regarding the delay in initiating retirement savings. This sentiment resonates with well-established financial advice that underscores the importance of starting to save for retirement early. The 25% of respondents considering semi-retirement highlights the challenges individuals face when they haven't adequately prepared for retirement.
Miles recommends a savings goal of at least 10% of income, a widely accepted guideline in financial planning. Moreover, the article sheds light on the difficulty of catching up on savings for those who start later in their careers, emphasizing the importance of consistent and increased contributions over time.
The role of employers in facilitating retirement savings is a key point. Auto-enrollment plans and automatic contribution increases in 401(k) plans have proven effective in boosting participation rates. This aligns with industry knowledge that shows these features can help overcome issues related to employee engagement and financial literacy.
The mention of SECURE 2.0 is indicative of the evolving regulatory landscape in retirement planning. The recent changes are expected to encourage even more participants in employer-sponsored plans to utilize auto-enrollment features, contributing to better retirement outcomes.
The article addresses gender-specific challenges in retirement planning, with women expressing less confidence in their savings lasting through retirement compared to men. The insight provided by Nate Miles underscores the potential benefits of auto-enrollment plans, especially for women who may not have consistent workforce participation throughout their careers.
In summary, the article provides valuable insights and aligns with established principles of retirement planning, emphasizing early savings, employer-sponsored plans, and the evolving regulatory environment. The information shared by Nate Miles reflects a deep understanding of the challenges and opportunities in the realm of retirement planning.
