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62% of Americans Are Making This Retirement Savings Mistake -- Are You?

We all make mistakes, and many of them hurt us in one way or another. A 2013 CareerBuilder survey found that 58% of resumes were dismissed by companies because of typos. Many people use fabric softener in all our loads of laundry, too, when it leaves a coating on fabric that reduces the absorbency of towels.

Some of our most damaging mistakes are financial ones, and 62% of Americans are making a whopping mistake: not saving even nearly enough for retirement.

A white keyboard is shown, with a big red key labeled with the word oops.
A white keyboard is shown, with a big red key labeled with the word oops.

Image source: Getty Images.

The below table shows how much older Americans -- the ones about a decade or so from retirement -- have socked away. Among older workers, 62% have saved less than $250,000, an alarming statistic, according to the 2018 Retirement Confidence Survey. And those older folks with $250,000 set aside (or even $350,000) aren't much better off.

Amount Saved for Retirement

Workers Age 55+

Less than $1,000


$1,000 to $9,999


$10,000 to $24,999


$25,000 to $49,999


$50,000 to $99,999


$100,000 to $249,999


$250,000 or more


Source: 2018 Retirement Confidence Survey.

The common (but imperfect) 4% rule suggests you withdraw 4% of your nest egg in your first year of retirement, and then adjust for inflation in subsequent years to make your money last 30 years. By that rule, $250,000 would provide you with only $10,000 in your first retired year, and a $350,000 account would generate an annual $14,000. Most retirees would be hard-pressed to make a comfortable life with that little money, even with Social Security benefits added in.

The numbers are even worse for younger Americans, but that's far less worrisome, because they have a lot of time to start socking away money in earnest. If a 30-year-old saves and invests just $5,000 per year for 35 years, earning an annual average of 8%, that will be enough to amass about $930,000! But a 55-year-old saving $20,000 per year for a decade will end up with just about $313,000 by that formula.

Amount Saved for Retirement

Workers Age 25-34

Less than $1,000


$1,000 to $9,999


$10,000 to $24,999


$25,000 to $49,999


$50,000 to $99,999


$100,000 to $249,999


$250,000 or more


Source: 2018 Retirement Confidence Survey.

What to do if your retirement savings are behind

If you're among the undersavers, what should you do? First, figure out a ballpark figure for how much money you'll need in retirement, to assess where you are. And if you are indeed behind, take heart, because there's still time to greatly improve your situation.

Here are some steps to take if you're behind in saving for retirement:

  • Delay retiring for a few years. Putting off your retirement by a few years will give you time to save more, and your nest egg will have to support you for fewer years of retirement. It can also mean you get more years on your employer's health plan, which can save you money and the funds in your retirement accounts will continue their compound growth, while you continue to earn wages in your later years.

  • Save more aggressively. No matter how much you're socking away regularly now, aim for more. Don't just save a certain amount, such as 10% of your income, assuming it will be enough. Crunch the numbers to see how much you really need to save. It's better to have more than enough than to fall short.

  • Spend less. There are lots of ways to cut back on spending, and you can probably shave $100, $300, or more off your monthly spending. Switching from cable TV to a streaming service is a start. Cut back on lunches out and dinners at restaurants.

  • Earn more. You might start by asking for a raise or looking for a better-paying job. You might learn more, perhaps earning some certification or designation, to qualify for better-paying jobs. You can also take on a side gig, at least for a few years, to bring in more moola.

  • Delay starting to collect Social Security if you expect to live a longer-than-average life. The longer you delay (up to age 70 when the bonus for delaying maxes out), the bigger your checks will be. This strategy isn't worth it for those who are likely to have average or below-average life spans, though. (The average monthly Social Security retirement benefit was recently $1,461, by the way.)

It's a big problem if you're far behind in your retirement savings, but it isn't necessarily an unsolvable one. Learn more, devise a strategy, and execute it with some discipline. It might mean the difference between living on $25,000 or $40,000 annually in retirement.

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