Americans don’t feel prepared for retirement.In fact, according to a nationwide survey conducted by LearnVest and Chase Blueprint®, only 20% of people have a retirement plan at all.
More people are banking on working until their 80s, and a majority are looking to work during retirement.
Given the job prospects for 70-year-olds, these aren’t plans so much as dreams.
We were also disheartened to find in the survey that just 46% of women are saving for retirement. What are the other half going to rely on in their old age?
Today, we bring you four real stories of women who are saving for retirement, plus the story of one woman who is already retired. Read on to see what you can learn from each of them.
How Much She’s Saved: $41,500 saved in a 403(b) and a supplemental retirement plan
How She Did It: I started saving for retirement at 22 with my first job. I was making just over $30,000 and contributed 4%. I can’t say how I first found out about saving for retirement, but I remember growing up thinking, “I want to retire early. I don’t want to work when I’m old.” My mum didn’t save when she was working, but she had a pension and just waited for it to kick in. I was determined not to be like her when it came to savings and money.
After four years at my first employer, I got a job where I was making $40,000. I was only there eight months and didn’t contribute to retirement, but the employer did. When our staff got let go, I cashed out the $2,400 in that retirement account. I had three months of emergency savings then, but I was unemployed for six-and-a-half months and went $10,000 into debt.
RELATED: Are you on track for retirement? Get a free financial checkup.
I began working at my current job in 2008, and immediately started saving 6% of my salary for retirement. I’ve increased 2% every year, so I’m currently at 14%, and I make almost $80,000. I withdrew $10,000 from my retirement account when I bought a condo in March. I didn’t incur any penalties since I was a first-time homeowner. I’ll put it back in February after I get my tax refund.
Now I’m engaged and live with my fiancé. He’s not as financially savvy as I am, so we haven’t combined finances because I don’t feel comfortable with that yet. When I bought my condo, I made sure to buy it in my own name.
The only thing I wish I could do is talk with someone about investing. I have a portfolio based on my projected retirement year, but I don’t feel confident enough to create my own mix. I am proud that I’m saving at all! So many of my friends haven’t started saving or save very little. Just do it, and enjoy the benefits later.
LearnVest’s recommendation to Jamila: Take Start Investing Bootcamp, sign up for The Market newsletter and read the Investing section of the Knowledge centre in order to become a more confident investor. LearnVest Planning Services also offers a Portfolio Builder plan for beginning investors.
How Much She’s Saved: $3,500 saved in an RRSP, the Canadian equivalent of a 401(k) or IRA
How She Did It: In my 20s, I thought personal finance was something other people did. I spent most of that decade travelling—not living beyond my means, but not thinking about the future either.
After finishing grad school with student loans at age 26, I realised I needed to get more organised. At the same time, my mum, who’s now 60, was planning for retirement (my parents got divorced when I was 3) and realised she should have organised her own finances better. For instance, after her divorce, she struggled to pay her mortgage, so she was withdrawing money from her retirement account at the same time she was putting money into it—and paying taxes on those early withdrawals. She’s going to be OK because she has a pension, but she says, “I wish I had known these things sooner. Why is there no personal finance education in schools?”
Three years ago, she started sending me personal finance books. I don’t know what I thought before–maybe that retirement would take care of itself–but when I read them, light bulbs went off. I realised that personal finance was about taking control of my life and that money opens up doors for you. I switched to a lower-fee bank account, set up a budget, created an emergency fund and set a goal to pay off my grad school loans. I also became more shrewd about negotiating my salary. No one is going to pay me what I’m worth unless I ask for it.
When I was 21, about $20,000 USD came my way–from a car accident when I was 17. I spent a third on my tuition, a third on my living expenses during undergrad, and a third on a school program abroad and travel. Now, my mum says, “You shouldn’t have done that,” but I don’t regret it. I could make myself crazy and calculate how much interest that money would have by now, but I also know myself: If someone had said something to me about retirement then, it would have fallen on deaf ears. I do know that time is on my side, so starting now—at age 30—is better than starting 10, 15 or 20 years from now.
How Much She’s Saved: $89,000 in a 401(a) and a 403(b)
How She Did It: I started saving for retirement with my first job at the age of 24. I was making $28,000, contributing 5% of my salary, and the university where I worked contributed 10%. That feels unreal to me today.
When I was 28 I changed jobs and started making $38,000. I kept the same contribution–5% from me–and got 5% from the university. I stayed in that job for 10 years and put away a lot.
Almost five years ago, after I got married and had my first child, I quit. I had a really great maternity leave where, for the first year, I worked three days a week for my whole salary. When the time came to resume working full-time, our parents offered us some support if I wanted to stay home full-time with our child. There was no thought about retirement at that point; this huge life change absorbed me entirely. I was making just under $60,000, and my retirement account was about $70,000.
Now I have two sons in private school, and tuition for them is $28,000. My husband makes $80,000, and freelances a little. Our parents chip in $37,000 a year, and they are the only contributors to my sons’ 529 college savings plans.
I hope when I return to the workforce in a year that I’ll find a position with similar great benefits, but given today’s reality, that’s probably a pipe dream. I’m really glad that I socked money away early on. When I started my career, I didn’t know I was going to take this five-year break from the workforce. It’s comforting to me that I have what feels like a significant amount.
LearnVest’s recommendation to Deborah: Explore the Retirement section of the Knowledge centre and read more on saving for her children’s college education. When she starts working again, she should also take Retiring in Style Bootcamp.
How Much She’s Saved: Has more than $190,000 in a 401(k), plus a pension
How She Did It: I started at my company as a customer service rep for a utility company when I was 18. I viewed it as a short-term job and didn’t imagine I would have an entire career at the same company. I tuned out anything about retirement—I just wanted the biggest paycheck possible.
After a few years, a friend said, “You should really do it—the company will give you money,” so I signed up. I didn’t miss seeing the extra money in my take-home pay. The company matched up to 6% of my paycheck, so every year, I put in 12% of my salary–6% from me and 6% from my company. I was making around $30,000 then.
At 22, I went back to school and worked part-time while I was in college. When I graduated, I wasn’t able to find another job that would pay me more than I was making, so I stayed and that blossomed into other careers at my company. In 1990, I moved to the IT department, when my salary was probably in the mid-50s. I’ve been there ever since but have had different positions and a steady progression of raises. Today I make almost $100,000 as a business analyst.
On top of my 401(k), I will also have a pension. The company ended that for people hired after 1990, but I’m grandfathered in. I should be able to get at least $2,000 a month from that when I retire.
My husband, who is already retired, has a pension and gets $3,500 from it. We’ve had a relatively low mortgage. We bought the house when we were 25, when it was very cheap. (We live near San Francisco.) Signing up for the 401(k) was the best thing I ever did, and the next best was to get the house.
LearnVest’s recommendation to Chris: See a financial advisor to find out if she is on track to retire comfortably. LearnVest Planning Services offers such financial plans.
Retired: living on Social Security income and support from daughter and son-in-law
How She Did It: I was born in Havana, Cuba, and moved to Miami when I was 18. I started working as a restaurant cook making a dollar an hour. In 1961, I moved to New York City and worked during the day in a factory making aluminium lawn chairs and in the evenings as a seamstress. I brought the rest of my family over from Cuba, which cost $1,000 in legal fees, and helped them pay their expenses until they got on their feet. I worked a lot of overtime to make $300 a week and slept maybe two to four hours a night.
In 1963, I got married to an American man and started learning English, but he told me that I didn’t have to because he would take care of us. In 1980, we separated, and in 1990, I started a commercial cleaning business in Houston and made $1,000 a week. I sent money to my mother and to my children. In 1995, my husband and I got divorced, but I received no alimony. When we were separated, I gave him $35,000 and asked him to put it away for me, but he spent it instead. In 2000, I moved to California, closed my business in Texas and began working at a hotel chain, earning about $280 a week as a hostess/cashier.
Throughout this whole time, I was not saving for retirement. Even though we were divorced, my ex-husband was my bank and my everything. Nobody ever spoke to me about retirement. I always thought I would be able to work and that Social Security would take of everything when I needed it.
In 2003, I was taking a room service order back to the kitchen and a co-worker playfully put his foot out, but I tripped and fell into the corner of a sink. I had extensive ligament damage to my shoulders and wrist. After surgery on my shoulders, the hotel said I was too old to return to work. I was 65.
Now I live with my daughter and son-in-law and receive $684 a month from Social Security. After I had to stop working, I was depressed that I worked so hard and now have to depend on others. I buy groceries and pay for my personal expenses, but my daughter and son-in-law pay for everything else. We make it work.
*At her request, Chris’s name has been changed to protect her identity.
**Because of Nieves’s limited English skills, her story was told through an interpreter.
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