Magazines, newspapers, and websites publish countless articles about retirement preparedness. Many say future retirees aren’t saving enough. Some, surprisingly, say to relax — you won’t need as much as you think.

We don’t want to sound alarmist, but it’s a safe guess that more people are in the not-saving-enough camp than in the have-more-than-enough camp, especially with future medical costs looming as a great unknown.

Learning from those who’ve been there

Stumbling on Happiness, a book by Harvard psychologist Daniel Gilbert, is a well written, insightful, laugh-out-loud examination of why we so often make bad decisions. Chapter by chapter, he explains how our tendency to misperceive how we’ll feel in the future or know what we’ll need when the future arrives leads to so many decision-making mistakes. Then he comes to a simple solution for making better decisions: ask others who’ve faced similar situations how their decisions worked out for them.

When current retirees are asked about their retirement preparations, common regrets include borrowing too much, retiring too early, and not saving enough money.

Research from the Transamerica Center for Retirement Studies emphasizes that last one, noting only 16% of today’s retirees “strongly agree” that they built a large enough nest egg.

If you’re not saving enough, far better to realize it now, identify what’s holding you back from saving more, and do something about it.

What gets in the way of saving enough

When people are asked why they aren’t saving more, many simply 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.

Here are five common problems that get in the way of saving for retirement, along with ways to solve the problems.

  • You haven’t run the numbers.
    According to the Employee Benefits Research Institute, only 48% 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.” The Institute also found that people who have run a retirement needs assessment report higher savings goals than those who have not, and greater confidence in their ability to retire comfortably.

    What to do? Use at least two retirement calculators to get a sense as to how much you should be saving for retirement each month. Then, if there’s a gap between how much you’re currently saving and how much you should be saving, let the knowledge of what you need to do motivate you to start narrowing that gap.
  • You aren’t managing the numbers.
    People generally don’t like the idea of using a budget. Non-budgeters believe tracking and managing their spending will be restrictive and too much work. However, people who use a budget tend to describe it as freeing. Knowing how much they can spend on this or that, all the while knowing their plan enables them to live generously and save and invest adequately, is empowering.

    What to do? Of the various budget tools available — paper and pencil, an electronic spreadsheet, the envelope system, budget software, or an online budget tool — the best one for you is the one you’ll actually use. Read some of our articles about putting a budget into practice and then just get started. You’ll find it amazingly effective in freeing up money that could be put toward increased retirement savings.
  • You’re spending too much on your home.
    Housing is most people’s largest expense, making it the category that’s most important to get right. Generally speaking, it’s best to keep the combination of your mortgage, taxes, and 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 much more than that, pray about doing something that’ll sound completely crazy — sell your home and buy one that’s more affordable. I know two couples who have done that. Nothing about the process was easy, but both are so glad to have made the change.
  • You’re spending too much on vehicles.
    Financing vehicles is normal in our culture — which is a big reason why it’s normal for people to live without any financial margin! Unfortunately, living without a cushion makes it extremely difficult to save for retirement.

    What to do? If you have a financed vehicle, commit to keeping it for 10-15 years. Once it’s paid off, redirect the payment to savings — some for your next vehicle and some for retirement.
  • You have a false sense of confidence about your earning potential.
    According to the Transamerica study, more than half of age 50+ workers plan to keep working at least part-time in retirement. However, only 5% of today’s retirees are working for pay. It’s fine to plan to work in your later years, but it can be dangerous to assume you’ll be able to and to count on that income.

    What to do? Plan vocationally, emotionally, physically, and spiritually to work as long as possible. But plan financially to retire somewhere between the ages of 65 and 70.

How confident are you that you’re saving enough for retirement? If you’re not saving enough, now is the best time to start addressing the issue.