A new report found that, despite the gloomy retirement outlook among many American employees, over one in five expect to retire before age 65.
Meet the future early retirees
According to the results of the 12th Annual Transamerica Retirement Survey, which was conducted among 4,080 American employees, slightly more than half of future early retirees have a college degree, half are under the age of forty and nearly half report an annual household income of less than $100,000 per year.
Future early retirees are likely to have a retirement strategy, start saving for retirement at a younger age, and be offered a 401(k) or similar plan by their employer. They also defer a high percentage of their annual salary into their 401(k) or similar plan. Additionally, these employees are likely to save for retirement outside of work and be very involved in managing and monitoring their retirement accounts.
Seven steps to retirement readiness
The following tactics can help employees improve their retirement outlook:
- Calculate your retirement savings needs.
- Develop a retirement strategy and write it down. Envision your future retirement, formulate a goal for how much you will need to save each year (be sure to include employer-sponsored retirement plans and outside savings), and be sure to factor living expenses, healthcare needs, long-term care and government benefits.
- Get educated about retirement investing. Seek professional assistance if needed.
- If your employer offers a plan, participate. Be sure that your annual salary deferral takes full advantage of employer matching contributions, if available, and defer as much as you can. If you decide against maximizing annual salary deferrals in the plan, be sure to save for retirement outside of work.
- Consider retirement benefits as part of your total compensation. If your employer doesn’t offer a plan, ask for one.
- Take advantage of the Saver’s Credit if eligible. Make catch-up contributions if eligible.
- Have a backup plan in the event you are unable to work before your planned retirement.
Additional recommendations for the retirement services industry, media, employers and plan sponsors, and policymakers can be found in the report Source of Inspiration: Future Early Retirees.
