Don’t Be A Victim Of The Retirement Crisis

The concern about retirement security in the United States is widespread, and for good reason. A recent survey revealed that 79% of working-age Americans believe there's a retirement crisis, a significant increase from 67% in 2020. This growing anxiety is further fueled by inflation, with 73% of respondents expressing heightened concern about their retirement prospects due to rising costs.

Is Your Generation Prepared for Retirement?

While the perception of retirement insecurity is high, for many, it's an unfortunate reality. Data suggests that a substantial portion of middle-class workers may not have saved enough to maintain their current lifestyle in retirement. The National Retirement Risk Index indicates that approximately half of U.S. households are not projected to sustain their standard of living when they retire at age 65.

Generation X (born between 1965 and 1980) is particularly vulnerable. As the leading edge of this demographic approaches age 60 in 2025, many may find themselves underprepared. Unlike their Baby Boomer predecessors, Gen X largely entered a workforce where company-sponsored pension plans were less common, shifting the burden of retirement savings more heavily to individuals. While the typical Gen X household possesses an average retirement nest egg exceeding $243,000, the median household holds a much smaller $40,000 for retirement. This disparity highlights a significant challenge for many within this generation.

A substantial portion of the private sector workforce—57 million Americans—lack access to workplace retirement savings options, further compounding the problem. Many households acknowledge that without the convenience and consistency of automatic payroll deductions, their retirement savings choices are significantly limited.

The public's frustration with the perceived lack of governmental understanding regarding the difficulties of saving for retirement is evident, with 87% of Americans believing leaders in Washington don't grasp these challenges, up from 76% in 2020. There's also a strong demand for action to safeguard Social Security, with 87% advocating for immediate congressional intervention to shore up its funding.

Legislative Efforts to Bolster Retirement Savings

In an effort to address these pressing concerns, Congress has passed significant legislation in recent years, including the SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019 and SECURE 2.0 at the end of 2022.

The SECURE Act of 2019 marked the most substantial retirement legislation in over a decade, introducing key changes aimed at helping investors better prepare for the future. Notable provisions included raising the Required Minimum Distribution (RMD) age and allowing penalty-free withdrawals from retirement accounts for first-time parents.

Building upon the initial success, SECURE 2.0 further expanded on these efforts, introducing new RMD dates, increasing catch-up contribution limits for retirement plans, and more.

While these legislative actions offer positive steps forward, they cannot entirely reverse past trends. If you're concerned about your retirement readiness, taking proactive steps to develop a personalized financial strategy is crucial. This strategy should consider your unique goals, time horizon, and risk tolerance.

Taking Control of Your Retirement Future

At INPAC Wealth Advisors, we empower our clients to confidently prepare for retirement. Our process begins with a comprehensive inventory of your assets, providing a clear picture of what your retirement could look like decades down the line.

Working towards a specific retirement goal can be incredibly motivating, especially when retirement is still on the distant horizon. Fidelity Investments offers a helpful guideline to assess your retirement savings progress:

1x salary by age 30
3x salary by age 40
6x salary by age 50
8x salary by age 60
10x salary by age 67 (full Social Security retirement age)

It's important to remember these are general estimates, serving as a valuable starting point for building and assessing your retirement strategy. Your individual circumstances may necessitate adjustments to these targets.

The Enduring Role of Social Security

Despite ongoing discussions about its future, Social Security is expected to remain a vital component of retirement income for many Americans. As you plan for retirement, it's crucial not to overlook the significant role Social Security can play in your overall financial strategy.

In 2024, the maximum Social Security benefit ranges from $2,710 to $4,873 per month, depending on your retirement age. While you can begin claiming benefits as early as age 62, waiting until your full retirement age allows you to receive 100% of your entitled monthly benefits. The optimal time to start drawing benefits is highly individualized, as each person's situation differs. Therefore, it's essential to integrate Social Security considerations into your comprehensive retirement plan.

Closing Your Retirement Gap

If you feel the retirement crisis is a direct concern for your future, there are actionable steps you can take today to build greater financial confidence:

Consider working longer: Delaying retirement by even a few years can significantly impact your financial resources.
Evaluate Social Security claiming strategies: Explore the pros and cons of drawing Social Security benefits closer to your full retirement age.
Increase your retirement contributions: Prioritize putting more money away for retirement, if your budget allows.
Optimize your investments: Ensure your investments are strategically aligned to work efficiently toward your retirement goals.
Utilize catch-up contributions: If you are age 50 or older, take advantage of the opportunity to make additional "catch-up" contributions to your retirement accounts.

We Are Here to Help

If you have any concerns about achieving the retirement you envision, INPAC Wealth Advisors is here to guide you. We specialize in working with individuals and families to create customized financial strategies designed to meet their specific needs. Navigating retirement planning on your own can be overwhelming. If you would like to review your current retirement savings plans, please contact our office. We would be pleased to help.

Disclosures: This content is provided for informational purposes only and should not be construed as legal, tax, or investment advice. Always consult1 with a qualified attorney, tax professional, or financial advisor regarding your unique circumstances before making decisions related to estate planning.

INPAC Wealth Advisors is not a law firm and does not provide legal advice. The information provided herein is based on current laws and regulations as of the date of publication, which are subject to change.