Why you should start pouring more into your 401k and IRA

It costs a lot to be alive these days, and most of us aren’t sure how we’re going to afford to retire. You know you should have started pumping money into your retirement account yesterday, but what if you haven’t been? Or you have, but you don’t think it’s nearly enough? You aren’t alone in wondering about this stuff, and the Employee Benefit Research Institute (EBRI) and Greenwald Research conducted a survey about it. We’ll break down how people feel about retirement planning — and why you need to get on top of it right now.

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The decline in confidence in the last year

From only 2022 to 2023, the rate of decline in the faith that we have enough money saved in our 401K retirement plan or IRA dropped the most it has since that 2008 crash. The survey sussed out people currently working and those already retired are worried about their financial retirement planning. We’re having flashbacks to 2008, and the parallels between then and now are making us anxious.

How people positively felt about having enough for retirement

  • Those still working dropped from 73% to 64%
  • Those already retired dropped from 77% to 73%

But the lack of confidence isn’t for not wanting to save for retirement. Other factors make it impossible for people to put money in their retirement accounts and live simultaneously.

Inflation and debt are the biggest hurdles to jump

Inflation is still a huge issue

  • 73% of those working and 58% of those retired say inflation makes them have to cut their spending

When things as simple as eggs and bread are double what they used to cost, even cheap meals aren’t stretching as far as they used to. Minimum wage isn’t cutting it, having one job isn’t cutting it, and we know social security alone isn’t going to cut it when we retire. 

Debt is starting to spiral

  • 6 out of 10 people reported having a debt issue

If we can’t afford our grocery bills — and forget about what rent costs these days — it’s no surprise people report having more debt this year than last. What’s maybe even more sad is people saying they understand their day-to-day finances, it’s just their salaries can’t keep up with the increasing prices for what we need to survive on a daily basis.

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What you should do right now to help yourself

  • Get help with your retirement plan to really understand it
  • Find a financial adviser if needed, or ask your work if they have one
  • Make plan changes as needed and revisit your account quarterly

Understanding your retirement account, no matter what you have in there, is a must. While 7 out of 10 people reported having a retirement account (and that’s awesome), only 7 out of 10 people understand how their retirement planning works, which is concerning as 58% of retirees and 40% of workers saw a decrease in their retirement accounts in the last year.

We know that was a lot of information to throw at you in a short amount of time. The gist is that if you don’t have a retirement account, get one now. If you have one and have no idea how it works, speak to someone other than your cousin, and make any changes you think you need to. We all want to enjoy our retirement years, not spend them being the greeter at the grocery store.

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