The Motley Fool Finds That 47% of Working Households May Not Have Enough Saved for Retirement. 3 Moves to Make Now.

Key Points

• The Center for Retirement Research found that nearly 50% of families haven't saved enough for retirement.

• The Transamerica Center for Retirement Studies finds nearly 80% of respondents think there is a retirement crisis.

• The Motley Fool thinks there are some things you can do to prepare yourself for retirement if you are concerned.

• The $23,760 Social Security bonus most retirees completely overlook ›

Retirement is a big life goal, but it is also a complex and scary life transition. You are basically giving up one identity and taking on another. There are huge social and emotional implications of that change, but there's also a massive financial factor to consider.

The Motley Fool's examination of the research on retirement has found that people are very worried about the money side of things. Here's what you can do if that includes you.

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How bad is it?

The Motley Fool has done a deep dive into the literature, examining retirement research from various sources. The numbers are troubling.

For example, the Center for Retirement Research at Boston College found that 47% of families may not have saved enough to pay for retirement. That would leave these families reliant on Social Security as their primary source of income in retirement. That's a problem because Social Security is meant to provide a safety net, not your entire financial support.

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Families aren't ignorant to the facts, however, with the Transamerica Center for Retirement Studies finding that 79% of respondents to a 2024 survey believed there was a retirement crisis looming. That was up from 64% in a 2020 survey from the National Institute on Retirement Security. Don't give up hope, here are three things you can do.

1. Have you examined all of your options to save more money?

If you are worried, first look at ways to increase your retirement savings. That may sound obvious, but a lot of people don't know all of the tools at their disposal. An easy one is to make sure you are enrolled in your company's 401(k) plan, if there is one, and that you put enough away to get the match. The match is basically free money and you don't want to give that up.

But don't stop at the match, which is usually around 4 percentage points or so of a participant's contribution. You should put as much in your 401(k) as your plan will allow. But going from zero to the max is a big ask. Start slowly and then increase your contribution at regular intervals. For example, up your contribution by 1 percentage point each quarter. If you start at the match, say 4%, in a year you would have doubled your contribution rate to 8%. In two years you'd be up to 12%. And in the third year you would probably hit the limit, depending on your plan.

If you want, you can also save outside of a 401(k) plan with an IRA or, even better, a Roth IRA. Both are tax-advantaged savings plans, with the IRA funded with pre-tax dollars (withdrawals are taxed as income) and a Roth IRA funded with after-tax dollars (withdrawals are not taxed). There are limits on who can open an IRA and how much can be saved each year. If you don't know, take the time to dig into the topic. The Motley Fool has plenty of information to get you started.

2. Do you really want to stop working?

A second big consideration is work. Should you actually stop working altogether? For some people there is no choice on this one, as injuries may impact their ability to work. But if you can keep working you will continue to generate income. The key is that you may not need to work full time, with a part-time job possibly providing enough to bridge the financial gap you fear or actually face.

The added benefit of working in retirement is that it can have material benefits for your mental wellbeing. Leaving the workforce is often much harder than people expect because they may lose their purpose, their friends, and the feeling of importance that comes with contributing to society via a traditional job. Sure, working can help on the money side. But even if money isn't an issue for you, you might want to stay employed.

But don't wait until the last second here, start thinking about working now. You never know, your current job might even be willing to keep you on part time. You'll only find out if you ask.

3. Do you really need as much space as you used to need?

A third valuable option for ensuring you have enough money in retirement is downsizing. Houses have to be larger when you have a family. But if the kids have left the nest already, you may not need as much space. A smaller home will likely come with smaller costs. And if you own your home, selling it can give a quick boost to your savings if the new place costs less to buy.

There are serious emotional issues when it comes to selling the family home. And there are major complexities around downsizing your collection of belongings. So this can be a stressful and difficult solution to your retirement concerns. But it can also be a powerful one and, importantly, something that might be best handled before you actually retire.

You aren't alone and you have options

Everyone who lives long enough is going to have to deal with retirement. And just about everyone who does retire has worries about what it will mean, if not financially then at least emotionally. Take a deep breath, you are not alone.

And the answers to your concerns are probably more straightforward than you think. If you haven't saved enough, start saving as much as you can right away. If you are worried about not having enough if you stop working, consider continuing to work. And if you have the opportunity, reduce your living costs by downsizing your life in any way you can.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

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