BALTIMORE — A new study by the federal government shows nearly half of older Americans lack retirement savings.
The U.S. Government Accountability Office found that 48 percent of Americans 55 and older have no money in either an IRA or 401(k)-style account; 29 percent have no retirement savings and no pension benefits.
We're told the secret to saving is to start young, so what if that ship has sailed?
“It's not too late,” said AARP Financial Ambassador Jean Chatzky. “You can absolutely make tomorrow better by saving a little bit more today."
Her advice to closing the retirement savings gap is:
1. Commit to a plan
"If we keep asking ourselves to save money on a regular basis, we're just going to keep failing. What we need to do is put it on automatic pilot, 401(k)s work because they move money automatically out of your paycheck before you have a chance to see it and touch it and spend it," said Chatzky.
If you're wondering how so many people have found themselves with little to no savings, Chatzky said it's because most employers used to provide pensions. Now, we're responsible for saving and investing, and it's not enough to rely on Social Security.
"We're living a lot longer. Social Security was never envisioned to be the source of all your retirement income for many, many years," Chatzky said. "It really only covers about 40 percent of what people are going to need to replace their pre-retirement lifestyle."
You'll also make more by waiting to cash-in on the benefit.
2. Decide on your Social Security Strategy
"If you can wait closer to age 70 to take it rather than earlier at age 62, your Social Security checks month-to-month will be substantially bigger," said Chatzky.
Finally, women are faced with a larger savings gap because there's a wage gap.
"And the result of that is when women get to retirement, we've got less money and then we outlive men by about five years, so we need to make that money last a longer period of time," said Chatzky.
3. Educate yourself
AARP has an online tool to assess your level of financial security in retirement and best options. To try out the tool, click here.
Chatzky also covers this topic in her podcast, click here to find out more about closing the savings gap.