Retirement Download
Posts
☂ Retirement complexities

☂ Retirement complexities

and how to overcome them

Michael Wight, Jason Phillips & Trajan King
February 04, 2025

In partnership with

Retirement Download

Strategies for a successful retirement

The Complexities of Retirement Planning

Photo by Aaron Andrew Ang on Unsplash

I spoke to my neighbor yesterday, a 35-year-old mechanical engineer who exemplifies the ambivalence many working adults feel toward retirement planning.

Despite regularly contributing to her 401(k), she admits she hasn’t prioritized retirement yet. With pressing financial obligations like a mortgage, car loans, and student debt, her focus is elsewhere.

“It’s always something I felt like I could wait until I’m 50 to figure out,” she remarked. However, she acknowledges the uncertainty surrounding her retirement savings goal, stating, “It’s hard to estimate how much we are actually going to need. There are question marks.”

This sentiment is echoed by many Americans. A recent survey of over 6,600 U.S. adults found that 40% of workers feel behind in their retirement planning and savings. Reasons include insufficient income, debt, or simply starting too late. Among baby boomers, 37% feel unprepared compared to 26% of Gen Xers and just 13% of millennials.

The State of Retirement Savings

Despite some encouraging trends, such as rising 401(k) balances and an all-time high in 401(k) millionaires, significant gaps remain.

According to Fidelity Investments, the average 401(k) contribution rate is 14.2%, slightly below the recommended 15%. While many employees contribute enough to secure employer matches, experts caution that this isn’t sufficient for long-term retirement goals.

“Nine percent [a 5% employee savings rate plus a 4% employer match], mathematically speaking, will not provide enough in that piggy bank,” explained Jacqueline Reeves, director of retirement plan services at Bryn Mawr Capital Management. “Further in our career, we should be saving 15% to 20%.”

You will find many people who suffer due to delayed savings. One of my friends, John Lisa Cutter, a 56-year-old teacher, shared his journey of delayed savings with me to share with our subscribers here.

Initially unable to save during his early teaching career, Cutter now prioritizes his 401(k) contributions and uses employer-provided tools to stay on track. His goal is to retire around age 67, but he admits, “I don’t think you ever feel completely caught up.”

Challenges Facing Retirement Savers

Research highlights widespread concerns about retirement readiness. A LiveCareer survey revealed that 82% of workers have considered delaying retirement due to financial reasons, and 70% of retirees regret not starting to save earlier.

Among middle-class households—those earning between $50,000 and $199,999 annually—only 20% are very confident they can retire comfortably, according to the Transamerica Center for Retirement Studies.

The biggest regret among Americans, as cited by a Bankrate survey, is not saving for retirement earlier. However, inflation and high living costs remain significant barriers.

“Inflation and high prices are cited as the biggest obstacle to progress in addressing our financial regrets,” said Greg McBride, chief financial analyst at Bankrate.com.

Strategies to Close the Gap

Start Early and Automate Savings Automating contributions through payroll deductions or direct deposits can significantly impact retirement savings. Start modestly and after a couple of pay periods, you won’t miss what you don’t Features like auto-escalation, which increases savings rates annually, can further enhance contributions. And, now that interest rates are still high, consider a high-yield account so you don’t lose money due to inflation.
Leverage Catch-Up Contributions Workers aged 50 and older can make catch-up contributions, adding $7,500 annually to 401(k) plans beyond the $23,000 limit for 2024. At 50, many people realize they need to play catch-up. These additional contributions provide a critical boost for late starters.
Delay Retirement Morningstar’s research underscores the benefits of delaying retirement. While 45% of households fall short at a retirement age of 65, this figure drops to 28% for those retiring at 70. Delaying retirement reduces the years savings must last and increases Social Security benefits by 8% annually up to age 70. “Even working a little part-time can be helpful,” suggested Spencer Look, associate director of retirement studies at Morningstar.

Maximizing Retirement Outcomes

A sustainable retirement plan hinges on maximizing Social Security, contributing to workplace accounts, and maintaining a diversified portfolio. Experts also recommend building an emergency savings fund to avoid dipping into retirement accounts during financial crises. Staying employable through ongoing training and upskilling can safeguard against income disruptions.

The Importance of Early and Consistent Saving

The sooner you begin saving, the greater the benefits of compound interest. If you do less at 30, you’ll still have more at 60 than if you did more at 50. However, late savers shouldn’t despair. By adopting proactive strategies, such as increasing contributions and delaying retirement, it is possible to bridge the savings gap.

Retirement planning is a lifelong endeavor. While the challenges may seem daunting, taking deliberate steps now—regardless of your age—can pave the way for a secure and fulfilling retirement.

The AI Stock Poised to Soar Under Trump’s $500B Plan

Nvidia was a standout opportunity back in February 2019, delivering a massive 490% return.

Now, there's another under-the-radar AI stock, 2,500x smaller than Nvidia, with significant potential. And with Trump’s recent $500 billion AI push, the timing couldn’t be better.

View Our Top Stock of 2025