What Motivates Americans to Save for Retirement?

Nearly half of American workers are not confident they will have enough savings to retire according to the Employee Benefits Research Institute’s 2013 Retirement Confidence Survey. Only 13% of those surveyed said they were “very confident” in a comfortable retirement, while 22% of people believe they’ll have to retire later than they planned due to the poor economy, inadequate finances and lack of confidence in social security—only 31% of workers think Social Security benefits will be higher than they are today.

That said, we don’t need a survey to tell us that retirement savings and social security are major issues for the massive generation set to retire within the next 20 years. Many employers no longer match 401(k) funds, further devaluing a 401(k) and demotivating the 401(k) holder. Many workers and financial professionals are clearly not confident that the federal government is prepared to support retirees in the future.
Preparing for retirement not only benefits you, but benefits the entire industry. If millions of Americans are not financially ready for retirement, those who do prepare to retire will be adversely affected by higher taxes or stress on the public safety net or some as-yet-unknown factor.
So how do motivate the millions of eventual retirees who haven’t started to think about their retirement? Is it fear? Is the best way to motivate workers to put a portion of their salary aside this year to paint before them a grisly picture of their golden years?
Let’s look at how fear effects action. When the fear is immediately apparent (say, a drooling bear moving rapidly toward you), it can be a great motivator and driving force; but how many of us really think about retirement savings while working full-time or even overtime while raising a family, practicing hobbies, enjoying friends – basically, while living a full life? Do we look at an unknown retirement as we look at a hungry bear? If the fear of a destitute retirement doesn’t inspire you to save and plan, then it’s not a good motivator.
Many people fear the unknown. EBRI reports that 44% of workers don’t know how much they’ll need for retirement. The numbers indicate, however, that ignorance may not be bliss. If half of all workers still don’t have confidence in the amount they’re saving, then they either must not fear the unknown or be adequately motivated by that fear.
Indeed, we may be motivated by a different kind of fear.
What is real to most of us is the fear of losing our money. What is real is watching the numbers fall every quarter, knowing that money you earned and saved is now gone, due to some individual or some company’s bad decisions or bad luck. Investors don’t always know all they’re options or they think alternative investments are too risky or too complicated to try. In short, they’re paralyzed.
If you’re reading this, you likely already hold a self-directed IRA or you are considering one. Maybe you were able to shake off the retirement paralysis, look at your statement, and do something to change the status quo. Now encourage others to do the same. The more workers who take control of their retirement funds, the better we will all be in the long run.

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