What makes someone wealthy? According to the Schwab Modern Wealth Survey almost half of Americans believe being wealthy is being able to spend money on experiences and things. Which makes sense; a nice car, house, watch and/or clothes are easy to notice. On the other hand, asking a friend or colleague to see their bank account or 401k might be a little awkward and intrusive. Then again it might make for a great sociology experiment. In that same survey only 27% people believe having a lot of money made someone wealthy.
In a 2016 study by the Economic Policy Institute (which we have referenced before: Retirement?! Don't talk about Retirement! Are you Kidding Me? Retirement?!) half of working families aged 32 to 61 had only $5,000 saved for retirement and the top 30% only had $50,000 saved!
What we see these numbers pointing to is that the idea of what makes a person wealthy may be part of the cause for so many not saving enough for retirement. The average person seems more concerned with funding their desired lifestyle than building up their nest egg. This behavior is in contradiction to the average retiree’s greatest fear of outliving their savings.
People are currently at odds with their retired selves. By sacrificing retirement savings for the common idea of wealth, they are robbing themselves of the potential for that wealth to continue and improve in retirement. This is an issue people really need to wrap their heads around with pensions becoming more scarce and the burden of funding a retirement being shifted more and more to individual savings.
According to Business Insider, after taxes and expenses the average family has roughly 10% of their take home pay remaining. Everyone has lives to live and things to do, but don’t leave all your problems for your future retired self. Taking advantage of employer match programs and putting away an extra 2 or 3% of that 10%r can make an enormous difference in your situation when you eventually do face the question of retirement. Doing so may be painful now, but you’ll thank yourself later and finally be able to enjoy that wealth without as many worries about the future.