4 Reasons You Should Plan For Retirement Now

in Financial Planning by

  • Set realistic retirement goals and track your progress against them.
  • Knowing your net worth can help inform a payment plan and an investment strategy.
  • Stop overspending and choose to instead pay yourself every month.

America is facing a $14 trillion retirement crisis. It’s a serious problem that cannot be ignored.

Even affluent Americans don’t feel the American dream is within reach anymore. And in a recent study, we at Personal Capital found that close to 30 percent of Americans don’t own a retirement account — whether it’s an employee-sponsored 401(k) plan or an individual retirement account.

Even more shocking, the median retirement account balance of working households is only $3,000. For those nearing retirement, that balance is a meager $12,000. With the average projected savings needed to retire comfortably hitting at least $1 million, people are blissfully unware that they’re staggeringly behind.

Unfortunately, the retirement strategy of delaying planning is the path of least resistance, chosen by millions of Americans. Not knowing provides false comfort that we can live in the moment and still make it out OK financially in the end. Yet it also perpetuates the looming prophecy that no matter how we live today, we’re not going to be able to save enough for retirement.

Let’s use these numbers as a wake-up call. It’s the duty of those in the financial services industry to ensure that the next generation doesn’t gamble away their future as they start to build their wealth.

There will always be obstacles that impact our ability to retire comfortably, and younger generations are facing some hard truths: They’re living longer, they’re taking on more debt, they’ve hit economic challenges (some out of their control), and they’ve lost the pension system as a means of retirement savings.

However, the good news is that they have time. Time to know. Time to plan. Time to invest. And time to save.

Knowing allows you to live in the present without feeling one step behind in your financial life. Knowing encourages people to look at their net worth and plan the life they want on their own timeline.

So what can investors do to ensure they reach a financially secure retirement?

1. Don’t rely on the problem to fix itself.

There’s a lot of controversy around how to fix this looming crisis. Some are calling for Social Security allotments to increase, while others are saying interest rates should be increased so we have better returns on savings.

These solutions could help, but even if there are changes implemented in the next 10 to 15 years, the crisis still lives at the individual level. So it’s imperative to create your own action plan.

Set realistic retirement goals and track your progress against them. As soon as you know how much you need to save for retirement given your target retirement age and spending level, you can adjust your immediate spending, saving and investing strategy.

2. Understand your net worth.

This isn’t a status symbol. Knowing your net worth and putting money toward retirement are two critical factors for taking charge of your financial future.

We know from our research that 73 percent of millennials don’t know their net worth and 40 percent don’t have a single retirement savings account. As many are combating debt due to outrageous student loans, knowing this information can help inform a payment plan and an investment strategy over the course of a lifetime.

3. Stop overspending and start investing today.

Once you know where you stand with your net worth, the easiest way to grow your savings is to cut back unnecessary spending and start building a solid investment strategy.

In your 20s, it’s wise to start putting 10 percent to 12 percent of your income per year toward investing in your retirement if you hope to retire around age 65 while maintaining your current lifestyle. If you wait until your 40s, you’ll have to save more than double that amount — closer to 25 percent — of your annual income to have the same spending power in retirement.

4. Don’t wait for a bailout; hold yourself accountable.

The American dream is attainable. The “goal” just needs to be adjusted to meet your own definition of what it means to retire comfortably. So set your goals, consult an advisor if you need help, make a plan, and start living it. Sadly, the result of most Americans having no private retirement savings is that these folks will face a lower standard of living in their golden years.

Reach your retirement dreams with Personal Capital’s Retirement Planner.

This article originally appeared in CNBC.

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Bill Harris

Bill Harris

Bill Harris is the founder of Personal Capital. He has spent 25 years building financial technology, notably serving as CEO of Intuit and PayPal. He is the founder of several financial technology companies and has served on the boards of numerous technology firms, such as SuccessFactors, RSA Security, Macromedia, and Answers.com.


  1. Mark

    It does make you wonder if someone will run for President promising to fix the system!
    The real fix is we all need to put more away!
    We need to better control our debt! We should t be able to borrow more than 80% of our homes value and still wright it off! In other words, we (should only be able to) wright off (for Tax purposes) 80% of the homes value as it relates to a loan we have against a house!
    Things like this will help people think different about debt.

    • Mark

      Also, what if they said, (to help push you to pay off your house) that:
      At 30 you can right-off 80% of the value in your house in interest.
      At 40 70%
      At 50- 50%
      At 60- 70%
      At 70- 95%

      Basically, here the government would be saying as you are getting old, your house should be paid off!

      • Mark

        The Last One should be 5%.
        I know it seems low but, we don’t want Retirees to owe anything on a house!

    • Michael

      Learn how to spell before spouting off on the internet.

      W R I T E

      • Mark


        I’m going to remain polite here.
        Obviously you don’t consider Debt a big American problem

  2. elteegee

    Write off

  3. Ryan Marquette

    I’ve been saying this for years now…
    The real long term solution to this problem is to mandate personal finance classes in High Schools nationwide! For too many people, they just don’t know anything about finances. Surely this is far more important than some art or gym elective for the nation’s next generation.

    • Mark

      I DEFINITELY Agree that this stuff should be part of High School!

      20% (or Max.) for your 401K contribution!
      If you get too much put away you can always cut-back on your contribution.

      Do yourself a favor and learn the 4% Rule.

  4. Kyle Hauptman

    – Mark, why is it 95% at age 70?
    I get the rest of it, in that a 30yr amortizes over time.

  5. Anonymous

    It is ” write off”

  6. NewSaver

    I’ve been working full time for about 5 years now and I am just now starting to make an effort to understand retirement savings. The simple truth is no one up to this point in my life explained to me how much I needed to save for retirement, or the best ways to do it, and I know I’m definitely not the only one. I think seniors in high school should have one mandatory class on handling finances. Even if they blow it off at least they will have had some exposure, and I think many kids will find it refreshing to learn something practical for a change. Truth is we can’t wait until our 40s/50s to think about saving. At that point we are too used to spending, and retirement will become a fantasy.

  7. Allie

    I used to really enjoy reading articles from Personal Capital. After reading all the blog posts sent out in the email today (all of them, coincidentally, by the same person), it’s clear that you guys are lowering the standard of quality content to appease the CEO and publish his articles. This is the same content you can find anywhere on the internet that gets incredibly repetitive. Please don’t post the same boring thing as anybody else. What I loved about Personal Capital is that you had new and insightful information.

    Your users and clients are people who have more control over and knowledge about their financial picture than your average, uninformed American for whom these articles would actually help. Don’t talk down to us and tell us to save more in your blog posts; offer us content that really makes us think about our situations and possibly reconsider our financial plans.

    • Marianne Ahlmann

      Marianne Ahlmann

      Hi Allie, we are always interested in learning what interests you most – thanks for your feedback! We work to cover a range of financial topics at all levels, and you’ll see lots of new topics coming this summer. Stay tuned and thanks for following the blog.

    • CP


  8. Jon Bennett

    Hey Bill, in the beginning you said 30% don’t have a retirement account, and then under section #2 you said 40%. Which is it? 🙂

    • Marianne Ahlmann

      Marianne Ahlmann

      Hi Jon – Thanks for the question about our survey! You’ll see that 30% of Americans of any age don’t have retirement accounts, and 40% of Millennial aged Americans do not.

      • Jon

        Ah, I see. I missed the millennial part. Interesting – thanks!

  9. Dana

    I’m sorry but the perspective of your article is skewed. You are making it seem like the 30% of folks who don’t have a retirement account are making a conscious *choice* not to save for retirement. And let me guess… the writer of this article undoubtedly is in her late 20s or early 30s and does not have dependents to care for or if she does she is likely married and has a dual income home… Or maybe she was not old enough to feel the true impact of the economic crash in 2008 (which many people are still recovering from.) I agree with Allie that these Personal Capital articles are skewed to people who have control of their finances and the extra money to squirrel away – but are currently buying yachts instead. I mean what kind of advice is “stop overspending”. . . Tell me something I don’t know. The best nugget in this article is the one about working to educate our children in High School about how to manage their finances.


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