Over half of all employed American adults feel “a little” or “far” behind in their financial preparations for retirement, according to a new survey from TD Ameritrade. The most common explanation? Respondents said they simply have no money left to save after meeting their regular expenses or they started saving too late. Many parents also said the cost of raising children made it impossible to save for their retirement.
One solution available to most people is to be more proactive in managing cash flow. Various surveys I’ve conducted show that very few people use a budget, which I consider to be the single most powerful personal finance tool. Here’s a simple how-to guide for getting started with a budget.
Another solution is to estimate how much you should be saving for your retirement. Research has shown that those who take this step are much more likely to feel confident about their ability to adequately fund their retirement, and in fact, have more in retirement savings than those who have not estimated their needs. A simple way to run the numbers is to use Fidelity’s myPlan Snapshot or myPlan Retirement Quick Check online calculators. The Snapshot requires answers to just five questions. The Quick Check is a more thorough analysis, but still only takes about 30 minutes to complete.
Have you estimated your retirement needs? Are you on track toward the accomplishment of your retirement goals? Have you made any changes in how you are investing due to the recession?