Are You Saving Enough?

Don’t assume that Social Security will be sufficient to support you in your old age.

The recent average monthly retirement benefit was just $1,828, or about $22,000 a year — and that’s just average. Plenty of people are receiving less than that. Clearly, most of us need to be saving and investing for our futures.

It looks like many, if not most, people are behind in their savings, too. According to the 2022 Retirement Confidence Survey, 34% of workers report that the total value of their savings and investments — excluding the value of their primary home — is less than $25,000. Even worse, roughly 1 in 5 people have less than $1,000 saved.

It has recently gotten even harder to save, with inflation kicking up the prices of so many necessities. The personal savings rate in the U.S. fell to a near record low in the fall, hitting 2.4% instead of the 7% to 9% that had been more common. On top of that, outstanding revolving consumer credit (such as credit card debt) has been rising, as people have charged some household expenses on cards.

If you’re among those who are struggling, know that you’re not alone. But still, try to minimize the revolving debt you take on and prioritize paying it off as soon as possible. Aim to start (or continue) saving aggressively for your future and investing long-term money effectively — perhaps in low-fee broadmarket index funds, such as those that track the S&P 500. A common rule of thumb suggests saving 10% of your income, but that’s too little for many people, especially those who are far behind.

Taking on a side job for a short

(or long) while can be a powerful strategy to dig yourself out of debt or generate money for investing. It doesn’t have to be painful, either, if you can find activities you enjoy that you can be paid for — perhaps giving music or language lessons, driving for a ride-sharing service or selling crafts you make.

The sooner you start investing, the more your money can grow.