Many people nearing retirement have an idea of how they want to live but aren’t sure they’ll ever be able to afford their vision. For them, the idea of a comfortable retirement — or any retirement — is far from a foregone conclusion.
“In this country, you work hard, save and pursue the American dream, and deserve a dignified retirement. But that’s a fairy tale,” says Chad Parks, founder and CEO of Ubiquity Retirement + Savings, a 401(k)-plan provider for small businesses.
A recent survey on retirement readiness by asset management firm Schroders shines a light on the problem. Among respondents ages 60-67 and still working, only one in four believe they have saved enough for retirement. Those 45 and older estimated they’d need $1.1 million on average to retire comfortably, but just 21 percent thought they’d get there. And a July 2023 Axios/Ipsos poll found that one in five Americans don’t think they will ever retire.
Afraid you’ll fall into that category? If the five signs listed below sound familiar, it may be time to make some changes to your lifestyle.
“It’s never too late to start making course corrections that will make things better,” says Anne Lester, former head of retirement solutions at J.P. Morgan Asset Management and cofounder of the Aspen Leadership Forum on Retirement Savings (of which AARP is a cosponsor). “You may not get what you fantasized about, but it can always get better.”
1. You’re spending more than you make
Fifty-eight percent of working adults are living paycheck-to-paycheck, according to a recent CNBC/Momentive Your Money Financial Confidence Survey. That monthly struggle “means you don’t have your arms around your cash flow,” Lester says. And if you can’t get ahead of your bills while you’re working, how confident can you be in doing it if you retire?
What can you do? “There is no magic way to make the reality better,” Lester says. “You have to spend less money than you are making and start saving.”
For some people, that could be as simple as curbing luxuries like dining out, frequent coffee runs and multiple streaming services, or doing more of your shopping at discount and secondhand stores. For others, it might require major lifestyle changes, like finding a cheaper place to live (housing accounts for a third of household expenditures, according to the U.S. Bureau of Labor Statistics).
Either way, it starts with figuring out where every dollar is going and identifying ways to reduce those outlays. Try tracking your spending for 30 or 60 days, writing down every purchase and expense. That will help you create a budget you can stick with — one that includes paying down debt or beefing up savings, if possible. The AARP Money Map can help you create a plan to get in better financial health.
2. You’re drowning in debt
If you have a lot of debt, it can take years to pay off, at great expense to you — and to your plans to retire. That’s especially true for high-interest debt like credit card bills, which can get bigger and bigger the longer it languishes.