Planning for retirement involves dozens of decisions that will affect the rest of your life. And while most Americans realize they need to plan for the future, many Americans also don’t prioritize retirement savings, if the data is to be believed.Â
According to USA Facts, a non-partisan, non-profit civic organization, as of 2022, almost half of American households had no savings in retirement accounts.Â
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Retirement accounts can include individual retirement accounts (IRAs), Keogh accounts, and certain employer-sponsored accounts.Â
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Yet too many Americans appear to be set up to depend heavily on their Social Security benefits, given that the average yearly Social Security benefit is currently about $22,000 — certainly not enough to cover most everyday expenses.Â
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Tony Robbins’ advice about how much money to save for retirementÂ
The most important step you can take toward a healthy retirement income is to “pay yourself first,” says personal finance expert and best-selling author Tony Robbins.Â
That often involves a person saving and investing in an IRA for their future.
How much you decide to pay yourself is up to you. Robbins shares anecdotes of people who set aside 20% of their income and others who commit to 50%. But the key is putting that money into an interest-bearing account and letting it grow.Â
“This money is for you,” writes Robbins. “For your family. For your future. It doesn’t go to the Gap or Kate Spade. It doesn’t go to expensive restaurants or a new car to replace the one that’s still got 50,000 to go on the odometer.”Â
Robbins recommends that you don’t think about this money as things you’re not buying today, but rather think about the returns you’ll reap tomorrow.Â
No amount of money is too small to add to your retirement savings plan, whether you’re putting the money into a Roth or traditional IRA or other retirement savings account.Â
Instead of spending $50 per person out at a restaurant, order pizza and split the cost among the group, Robbins advises. You could save yourself $40 every time you go out.Â
More Social Security advice:
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- Suze Orman explains how everyone can tame a big money fear now
“Forty dollars doesn’t sound like much?” Robbins asks. But, “Do the math.” Saving $40 each week comes out to around $2080 a year. Then, saving that much each year over the course of 40 years, means you’ll net $581,944, Robbins says, assuming you’re earning 8% compounded return each year.Â
With that you could buy the pizza parlor.Â
Tony Robbins says small, consistent steps yield huge retirement rewards
Robbins believes small, consistent actions will reap big rewards. Imagine if you could save more than that $40 each week. Saving $100 a week could mean $1 million at a time when you’ll need it the most.Â
So what percentage of your paycheck will you save? 10%? 12%? $15% 20%? “Find your threshold and ‘circle’ it,” Robbins says. “Commit to it. And automate it!”
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We should all be saving a lot more — and we used to. Personal saving has grown more important as employers have shifted away from defined benefit plans, or pensions, putting more of the responsibility on workers to plan for retirement, notes USA Facts. In 1989, for example, half of working households ages 50 to 60 had a defined benefit plan. In 2022, only a quarter did.
In 2022, between the ages 55 and 59, the median household in the U.S. had $24,500 in retirement accounts, $7,900 in checking and savings accounts, $76,000 in financial assets, and a net worth of $320,700, also according to USA Facts.
“By committing to a simple but steady code of savings, by drawing down on your income each pay period, there’s a way to tap the power of compound savings and let it take you to unimaginable heights,” says Robbins.Â
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