Americans say 3 roadblocks stand in the way of saving enough for retirement
- In a survey from Kiplinger and Personal Capital, Americans said that high health insurance costs, disappointing investment performance, and debt are keeping them from saving for retirement.
- Rising healthcare costs are a major concern of Americans of all ages. Additionally, consumer debt is becoming a big problem, likely thanks to rising living costs and stagnant wages.
- Additionally, people are feeling strain from poor investment performance. While the Great Recession didn't help, neither does the fact that Americans are waiting longer to save for retirement and shortening the timeline of their investments.
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From higher costs of living, to skyrocketing healthcare costs, to poor stock market performance caused by the Great Recession, a combination of factors have caused Americans to miss their retirement savings goals.
Personal finance site Kiplinger and digital wealth manager Personal Capital asked 850 Americans what stood in the way of saving for retirement. The data shows that three main factors have put a strain on Americans' ability to save for retirement: healthcare costs, poor investment performance, and debt.
1. Healthcare costs are higher than ever
Bob Herman reports for Axios: "From 1999 to 2017, the cost of family health insurance coverage has more than doubled the amount of take-home pay it consumes." Healthcare costs are a big expense for Americans at all ages and stages of life. Even people who have already retired find healthcare is one of their biggest expenses.
Personal Capital found 41.4% of survey takers cited healthcare costs as a reason they're unable to save. When asked what worried them most about retirement, 65% cited healthcare costs as a concern. Across all age groups, healthcare costs are seen as the biggest roadblock to saving and retiring.
2. Investments didn't go to plan
Just under 30% of all respondents (29.4%) said that dissapointing investment performance has stopped them from saving as much as they would have liked to for retirement.
It's certainly true that the Great Recession didn't help investments. According to data from The Balance on S&P 500 index funds returns throughout the past three decades, deep negative returns in 2002 and 2008 brought down portfolios significantly.
But, it's also worth noting that saving for retirement isn't about timing the market, it's about allowing your investments time in the market. While Americans may have seen low performance in those years, there were also many more positive years, and between 1973 and 2016, investors saw an overall positive increase of 11.6% in the S&P 500 index.
3. Consumer debt is a huge burden
According to Kiplinger and Personal Capital's data, 21.3% of Americans said that debt, not including student loans, kept them from saving for retirement. Things like credit card debt, medical debt, auto loans, and mortgage debt have kept Americans from saving, and increased costs of living might play a role.
While living costs have gone up, wages aren't increasing fast enough to cover them. Data from Pew Research center shows that Americans' buying power and wages have barely budged since 1978. The result of that gap is debt. According to data from Experian, credit card debt has been steadily climbing since 2009.
For many Americans, high costs of living and the resulting debt is standing in the way of saving for retirement and building long-term wealth.
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