Overcoming 5 Obstacles to Saving for Retirement

Mar 29, 2022
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In your 30s and 40s, preparing financially for retirement is a remote concern. Financial concerns and obligations of a more pressing nature take precedence over a nebulous need that remains decades away.

However, when you reach your 50s, retirement preparedness takes on a sense of urgency. The years are now zooming by. Will you be ready when your earning days are over?

Heed the voices of experience

When researchers asked current retirees to reflect on their retirement preparations, common regrets include borrowing too much during their working years, retiring too early, and not saving enough money. A 2018 report (PDF) from the Transamerica Center for Retirement Studies emphasized that last one, noting fewer than half of today’s retirees are confident that they built a large enough nest egg.

As for current workers, those saving little or nothing for their retirement years often say they can’t — they don’t make enough money to cover their bills and save. For some, that’s undoubtedly true. But many others could save more if they adopted specific behavioral and lifestyle changes.

Below, we list five common obstacles that hamper financial preparation for retirement — and we provide specific suggestions for moving past them.

  1. No Roadmap
    According to a 2021 survey (PDF) by the Employee Benefits Research Institute, only half of current workers “have ever tried to calculate how much money they will need to have saved so that they can live comfortably in retirement.” Even workers with an employer-sponsored retirement plan (or an IRA) were only slightly more likely (57%) to have made such calculations.

    What to do?
    SMI members should get acquainted with MoneyGuide, the award-winning financial planning software that can assess your current financial condition and plot a path toward a secure retirement. MoneyGuide, available to Premium-level members for a one-time $50 fee, provides a clear picture of how much to save/invest each month to reach your retirement goals. (For “ballpark” calculations, try Vanguard’s free online retirement calculator.)

  2. Insufficient Management
    Many people believe tracking and managing their spending is too restrictive — and too much work. On the contrary, good money management is freeing, and apps/software have made it less time-consuming. Knowing how much you can spend on this or that, all the while knowing your plan enables you to live generously and save and invest adequately, is empowering.

    What to do?
    Of the various budgeting tools available — from apps to spreadsheets to paper-and-pencil — the best one for you is the one you’ll actually use. You’ll discover that better management of your day-to-day finances is remarkably effective in freeing up funds to put toward retirement savings.

  3. Undermined by Overhead
    Housing is probably your largest expense, so it’s crucial to keep your spending in this category within certain boundaries. Generally speaking, it’s best to keep the combination of your mortgage, property taxes, and homeowners insurance to no more than 25% of your monthly gross income — even better if you can keep it to no more than 20%.

    What to do?
    If you’re spending above those targets, pray about doing something radical: selling your home and buying a more affordable one. Given the recent run-up in housing prices, finding a more affordable place may not be easy. But don’t reject the idea without looking into it. Who knows what you might discover?

  4. Squeezed by Car Payments
    Carrying car-related debt is a big reason many people have no financial cushion. Auto payments, which often stretch out for six or seven years, make it difficult to save for retirement.

    What to do?
    If you have a financed vehicle, commit to paying it off. Then, continue to drive that car for as many years as possible. Redirect the amount you had been paying on the auto loan toward savings — some for your next vehicle, some for retirement.

  5. Not Facing up to Reality
    Optimism is a good thing, but being overly optimistic can keep us from a sober assessment of probabilities. According to a 2021 Transamerica survey (PDF), nearly 60% of workers plan to keep working at least part-time in retirement — primarily to continue earning income. It is unlikely that most of them will be able to do so, at least based on the work status of people currently in the 65-74 age range. Only about 25% of such people are still working for pay. The percentage drops to less than 10% for those over age 75.

    Although it’s fine to plan to work in your later years, don’t presume that you’ll be able to continue to earn income. Maybe you will, but most likely, you won’t. A 2018 study (PDF) found that more than half of retirees had to leave the workforce sooner than they had planned, often because of job losses or health concerns.

    What to do?
    Plan vocationally, emotionally, physically, and spiritually to work as long as possible! But, when it comes to your finances, assume that you will retire somewhere between the ages of 65 and 70 and plan accordingly.

Take action

How confident are you that you’re saving enough for retirement? If you’re falling short, identify the things that are holding you back from saving more and do something about them. The time to start is today.

Written by

Joseph Slife

Joseph Slife

Joseph Slife has been a news writer for the Associated Press, a college instructor, and a radio host. He and his wife Joye have three grown sons.

Matt Bell

Matt Bell

Matt Bell is Sound Mind Investing's Managing Editor. He is the author of five biblical money management books and the teacher or co-teacher on three video-based small group resources. His latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, was published by Focus on the Family in 2023. Matt has spoken at churches, universities, and conferences throughout the country and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

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