Are you saving enough for your retirement? This question will elicit a lot of answers that will boil down to one thing: you have an insufficient salary that is barely enough to sustain you from paycheck to paycheck.
Surely most of us know the importance of setting aside money for our future, but a lot of people still don’t make it a point to save a portion of their earnings. Well, this could turn around if you get a pay raise … then your money would be enough for the dues and expenses.
However, even for others who receive raises, putting the extra pay for retirement is a problem.
A Morning Consult and Insider survey asked 2,000 Americans of their spending habits, debts, and financial status. Half of the respondents said they are working, 399 of which were millennials, 217 baby boomers, 337 GenXers, and 32 GenZers. One thing is constant across the generations, they found it hard to save up for their future.
Sixty percent of those who are employees have been given a pay raise in the past year. However, a whopping 42 percent of them admitted they are not saving for a comfy retirement.
What’s alarming is that 50 percent of GenXers, who are 34 to 54 years olds this year, have no 401(k) or IRA. For millennials, 23 to 38 years olds, 54 percent have no retirement savings account either, but at least they still are relatively young to make up for the lost time before they finally leave the workforce.
Only 13 percent of both millennials and GenXers do have a retirement savings account but aren’t keen on contributing. As usual, most of them pointed at a low salary as the reason they can’t set aside money. However, of those who aren’t actively putting money in their accounts in all generations, 34 percent have their pays boosted.
Lifestyle creep may be a factor in why those who scored pay raises can’t manage to save up for their retirement.
This happens when your way of living keeps up with your rising earnings, which means what used to be luxuries for you suddenly become necessities. One manifestation of this is when you set your mindset that you deserve something you are about to purchase instead of choosing to save the money.
Instead of solving your debt problems, lifestyle creep can help worsen it. Plus, your retirement plans may suffer, especially if you are near retirement age.
Simple examples of which are opting for the more luxurious bottle of wine at a restaurant and choosing a ready-made coffee from Starbucks instead of brewing one.
It is worth noting, however, that millennials are facing multiple debts, the biggest of them is from credit cards.
They also have to pay student loan debts, which is where their pay raises may have gone off. These problems are often hard to solve because of their starting salaries, which results in extreme stress. Most young adults would see success as not being rich but as without debt.