Do you have enough in the bank? Only 24% of Americans nearing retirement think they do — here are 3 ways to bolster your nest egg

Fears regarding retirement savings extend to younger generations as well. Working Americans aged 45 and older believe they will need $1.1 million in savings to retire comfortably, yet the majority (59%) expect to have less than $500,000 saved.

“There are profound gaps between what American workers say they need for a comfortable retirement and what they expect to have,” said Deb Boyden, Head of US Defined Contribution at Schroders.

Despite the bleak outlook, there are ways to help ensure your golden years are as bright as possible.

A sad state of retirement readiness

The Schroders 2023 U.S. Retirement Survey — which included 2,000 investors nationwide — revealed a great lack of confidence in retirement readiness and planning.

While the majority of working Americans think they’ll need at least $1 million saved up for retirement, only 21% of those aged 45 and older expect to reach that mark, down from 24% in 2022.

For younger millennial workers (aged 27-42), only 29% expect to reach $1 million in retirement savings — and 27% expect to have less than $250,000 in savings by the time they retire.

“This could be from a lack of planning, or for many it might just be too hard to save and invest enough to reach their retirement goals,” said Boyden.

The survey also looked at the impact of financial stress on health concerns, including anxiety and trouble sleeping.

A lot of that stress was driven by poor performance in workplace retirement plans in 2022 — driven by a miserable year for stocks and bonds amid inflation and the rising interest rate environment.

Almost two-thirds (64%) of working millennials and 62% of older workers with a workplace retirement plan like a 401(k) said they’re concerned they won’t be able to grow their workplace retirement plan assets to the level they hoped to achieve.

If you’re worried about how much money you have saved for retirement, here’s three ways to bolster your nest egg.

More: How to retire at 50

Settle your debts

Before you start adding up your funds set aside for retirement, make sure you have a plan for settling all of your debts.

This is important because things like credit card debt, your car loan, the mortgage on your house, and the remaining balance on your student loan all accrue interest over time.

You don’t want to keep racking up interest charges while trying to save — especially with rates as high as they are currently.

If you’re not in a position to pay debts and you’re tied down by multiple lines of credit, you can try negotiating with your lender or consider a debt consolidation plan, which pools your various debts into one simplified loan, often with a lower interest rate.

Make the most of your retirement accounts

When planning for your financial future, you should consider using tax-friendly investment vehicles like a 401(k) account, if your employer offers one.

A 401(k) retirement savings plan will allow you to steer a portion of your pay into an account where you can invest and grow your money — and get a tax break.

If you don’t have access to a 401(k), you might consider opening a traditional IRA, where you can contribute pretax income and grow it tax-free until you make withdrawals in retirement. You’re allowed to contribute up to $22,500 in a 401(k) and up to $6,500 in an IRA in 2023.

Another option is a Roth IRA, where your contributions are taxed upfront so that your withdrawals are tax-free in retirement. Roth IRAs offer some advantages and flexibility compared to traditional IRAs, but they’re also subject to certain rules and limitations and you can face penalties if you withdraw your earnings too soon.