Do you need to save more for retirement? Study says you're not alone

For most workers, a comfortable retirement is the end goal. Unfortunately, 57% of workers are unsure about their ability to retire comfortably, according to Bankrate’s latest retirement planning survey. Part of that doubt may stem from uncertainty about when Social Security will run out of money. However, the study revealed interesting generational differences. Younger workers tend to be more optimistic, probably because they have more time to save. In some cases they take action; Gen Z workers are the most likely to say they are saving “a lot more” or “a little more” than they did last year.

And you? Are you taking action? No matter your age, you can take steps now to ensure a financially healthy retirement.

The main results of the survey

More than half, or 57%, of American workers feel they are behind on their retirement savings.
More than 30% feel significantly behind.
Over 60% of employees are paying more or about the same amount into their retirement savings as they did a year ago.
But 37% are paying less than they were a year ago.
Nearly half (48%) of American workers with a retirement goal don’t think they’re likely to save that much.

Retirement provision according to age

Survey respondents were asked whether they felt they were ahead of where they should be, behind, or exactly on track. Astonishing, Only 15% of employees feel they are performing ahead of their expectations.

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Older workers tend to feel they are behind on their retirement savings, with 68% of Millennials and Gen Z workers being slightly more optimistic: 53% of Millennials and 40% of Gen Z workers feel the same way.

Retirement planning based on income and education

Workers with at least a college degree or a two-year college degree are most likely to feel behind on their retirement savings.

No high school diploma/high school graduate: 59%
Some college/two-year degree: 61%
Four-year degree: 53%
Postgraduate degree: 48%

Lower-income workers feel like their retirement savings are the most behind compared to other income groups.

Under $50,000 per year: 64%
$50,000-$79,999 per year: 58%
$80,000 to $99,9999 per year: 55%
$100,000 per year or more: 50%

When asked whether they were paying more or less into their retirement savings than last year, Generation Z workers were the generation that paid more into their retirement savings than they did a year ago.

Generation Z workers: 30%
Millennial workers: 27%
Generation X workers: 29%
Employees of the baby boomer generation: 17%

In contrast, baby boomers, those closest to retirement age, are the most likely generation to contribute less to retirement than they did a year ago.

Generation Z workers: 14%
Millennial workers: 17%
Generation X workers: 15%
Employees of the baby boomer generation: 21%

If you feel like your retirement savings are behind, it’s time to get back on track, regardless of your age.

Increase your pension contributions

One option is to increase your retirement contributions now and let the power of time and compound interest do the work.

For example, let’s say you’re 40 years old, living on a salary of $65,000, and have no retirement savings. If you saved just 15% of your gross income for retirement, you would contribute $812.50 per month to a 401(k) or IRA account. At the end of 25 years you would be a millionaire (a few times over).

The Bankrate survey shows that at least one in four workers, or 27%, are contributing more and 36% are contributing about the same amount to their retirement savings compared to last year. Only 16% pay less and 21% pay nothing at all. However, employer-sponsored plans will have higher contribution limits in 2024, meaning you can save more now. For 2024, you can invest up to $23,000 in your 401(k) contribution and, if you’re 50 or older, an additional $7,500 as a catch-up contribution.

If you want to get a sense of how your retirement savings compare to those of your peers, check out “The Average 401(k) Balance by Age” and “The Average IRA Balance by Age.”

Increase your income

They are your best advocate when it comes to increasing your income. Asking your boss for a raise can be intimidating, but if you keep track of your accomplishments throughout the year, you might be surprised at how well negotiations for a promotion or raise go. And when you get that raise (which we know you will), pay it into your retirement savings.

You could also take up a side hustle, like driving for Uber, walking dogs, creating a podcast, or one of these other seven online side hustles. Use your talents to make money. Then consider setting up a solo 410(k) plan where you contribute as both an employer and an employee. If you earn enough, you can reach the combined maximum contribution limit of $69,000 in 2024, increasing your savings.

Pay off high-interest debt

According to the latest data from the Federal Reserve, credit card debt in the U.S. reached $1.14 trillion in 2024 (that’s trillion with a “t”). Credit card balances increased by $27 billion, with the average balance in 2023 at just over $6,500 per user, according to Experian.

With average interest rates hovering around 20.70%, according to Bankrate, a high balance means you’re losing money every month in interest and fees that could be put toward your retirement. Therefore, you should consider paying off your high-interest credit card balance. Or, better yet, make a plan to pay them off.

Think of it this way: If you have a $5,000 credit card balance with a 17% interest rate and you only make the required minimum payment of 2% on the balance owed each month, it will take over 30 years to pay off the balance According to TransUnion, you’ll pay about $5,000 (if you don’t charge the card with new purchases) and end up paying over $10,000 in interest alone.

How much do you need to retire?

Who knows? For many Americans, their retirement savings goal is one Secret; 23% don’t know how much they will need in retirement. “While I value openness, it’s pretty suboptimal that nearly one in four American workers say they don’t know how much they need to fund their retirement and live a comfortable life. You should put this task on your financial to-do list,” says Mark Hamrick, senior economic analyst at Bankrate.

A million? “One of the first necessary or helpful steps toward success is to identify a goal and have a plan. Doing otherwise is the financial equivalent of driving without a seatbelt or, worse, with blinders on.” This is the breakdown by age Workers who feel like they need a million dollars to retire comfortably:

Generation Z workers: 31%
Millennial workers: 40%
Generation X workers: 37%
Employees of the baby boomer generation: 22%

Conclusion

If you’re late to the party and feel like you don’t have nearly enough in the bank to retire, working with a trusted financial advisor can help get your finances on the right track. They can explain your options and develop a plan so you can retire comfortably. But if you’re young and work or retirement is still a long way off, take action now to secure your future. After all, you only really retire once, so make the most of it.

Do you need to save more for retirement? Study says you’re not alone

The main results of the survey

Retirement provision according to age

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