The daily grind is hard enough. That we know. And trying to save enough money for a comfortable retirement can be difficult among other financial priorities. In case you’ve been feeling a little blue about your retirement future, we have a few statistics that might put a little pep back in your step.
Let’s remove that dark cloud of uncertainty hovering over our retirement plans and shed some positive light on a few noteworthy points. Get out of that hole you crawled into, and read these 15 retirement facts that will restore your faith in an attainable life of leisure.
1. Old age doesn’t begin until 74
Have you heard the good news? You’re not old — yet. In fact, you won’t be old until you hit age 74. Many might have previously categorized those 65 and beyond as “old,” but new research more accurately defines old age as having 15 or fewer years left to live. Average life expectancy today predicts we’ll live into our 90s, so experts feel comfortable officially labeling you old at 74. This means you’ll have more time to invest in your health, enjoy your family, and save for retirement.
Next: Regardless of age, Americans are maximizing their savings in this retirement account.
2. More people are maxing out IRAs
Thankfully, more Americans today are taking full advantage of IRA perks, such as the fact that retirement savings can be tax deferred (Traditional IRA) or tax exempt when you withdraw (Roth IRA). It might warm your heart to know though contributions are inconsistent, more owners are maxing out when they can. In 2014, 55.4% of people maxed out contributions to their Individual Retirement Accounts. That’s up from 43.5% in 2010. As a result, the overall average IRA balance increased to a comfortable $134,244 in 2014.
Next: Speaking of increased retirement balances, this next account saw record savings in 2016.
3. 401(k) balances are rising
It’s no secret that investing in a 401(k) plan will improve retirement success, and it seems people are starting to take a hint. 2016 ended in record numbers for 401(k) contributions, seeing an average 401(k) account balance of $92,500. But that’s not the only retirement record 2016 crushed. The average contribution rate for 401(k)s rose to 8.4%, according to Fidelity, which was the highest it’s been since 2008.
Next: See why you shouldn’t worry too much about making sound financial judgments as you age.
4. Financial knowledge mostly stays intact as you age
Although your ability to make sound financial judgements could harm you during retirement, research shows most people in their 70s and 80s can still manage money with the best of them. Take comfort in knowing the ability to perform standard money-management tasks, such as paying bills and comprehending your payment receipts, will likely stay intact as you age. This is a welcome sentiment for fiscally responsible people who plan on staying atop their finances later in life. This also suggests we should adhere to responsible practices now in hopes that they become second nature later.
Next: But don’t quit your day job just yet.
5. More people are working in retirement
Sure, more people are working in retirement, but it’s good for them. Even the most relaxing parts of retirement can lead to boredom quicker than expected. Instead, more seniors are looking for a permanent retreat that includes both responsibility and leisure. Working even a part-time job will help broaden your social sphere by about 25%, and participating in appropriate work allows you to stay active and engaged. This, in turn, does wonders for retirees’ cognitive and physical health.
Next: Less risk sees more reward.
6. More people are avoiding dangerous stocks and heading for ETFs
Even if millennials and Gen Xers show occasional traits of irresponsibility and risk, new data show the next wave of retirees might be starting to exude a few sound financial behaviors. Investors saw an increased interest in Exchange Traded Funds and a decreased interest in stocks from people looking to morph simple savings into investments. This decision is a profitable one. Because of its versatility and power, many are using ETFs as an opportunity to cut ties with risky individual stocks and pricey mutual funds.
Next: But that’s not all America’s future is getting right.
7. Millennials are saving for retirement earlier than other generations
Is it possible retirement words of wisdom are actually making their way past Instagram feeds and viral videos and into the heads of the younger generations? Transamerica Center for Retirement Studies thinks so. According to its research, millennials actually begin saving for retirement at a median age of 22, whereas Gen Xers waited until 27, and baby boomers started at 35. This is great news, considering the sooner we start saving, the bigger our savings grow.
Next: 401(k)s are feeling the love from all generations.
8. Americans put more than usual into 401(k)s
401(k)s adhere to the standard adage: Put more in, and get more out. Luckily, we’ve seen an increase in the percentage of salaries workers put into their accounts. In 2015, employees contributed an average of 6.8%, while employers contribute 4.7% of gross annual pay. This amounts to billions more saved over the years for retirement hopefuls.
But perhaps most exciting part is those who aren’t as up-to-speed on 401(k)s and retirement need not worry. Unless specific action is taken to remove yourself, you’ve probably been automatically enrolled in your company’s contribution plan. More than half of plans are automatic, meaning your opportunity to save is almost guaranteed.
Next: It’s OK to feel better about yourself!
9. Americans feel better about themselves financially
Money continues to be the leading cause of stress for Americans. So it might seem counterintuitive to report we’re also feeling better about our overall financial situations. In an annual financial study by Fidelity, 45% of surveyed Americans said they were in a better financial situation in 2016 (up from 39% in 2015), which is the highest percentage in eight years.
Next: See how America is making strides in retirement education.
10. It’s easier than ever to learn about retirement
With the world at our fingertips, it’s easier than ever to study up on retirement practices. One simple internet search will produce hundreds of pertinent finance blogs, retirement websites, and free online courses, perfect for money-hungry retirees. Even banks are starting to offer tutorials on insurance, taxes, retirement, homeownership, and identity protection. With all this information readily available, there’s no excuse for you to be in the dark about your retirement future.
Next: Knowledge is power, right?
11. More boomers talk money to their kids
Long gone are the days of taboo family topics and financial secrets. Baby boomers make more of an effort to have the “money talk” with their children than in the past. About 3 in 4 millennials report regularly discussing finances with their parents growing up versus 1 in 3 baby boomers. Millennials report a heightened willingness to chat about private financial matters with professionals, family, and friends much more than the older generations were. As a result, America’s future feels more confident in its financial status.
Next: Your employer is even helping out with retirement.
12. Most employers contribute to 401(k)s
The good news is it’s getting harder to find a company that’s not contributing to employee retirement plans. A recent study found employers made one-third ($115 billion) of total 401(k) plan contributions in 2014. Employers contribute to about 95% of large plans and 75% of small plans.
Next: Not only are employers contributing to plans, they’re also making it easier than ever to save more money.
13. Employers set default savings rates to get people saving more
Even better than employer contributions are automatic employer contributions. Auto-enrollment gets a bad rap for things, such as bill payments and Netflix subscriptions, but it’s a welcomed relief for future retirees. T. Rowe Price reports an increased number of companies are elevating the industry contribution standard to 6% rather than 3%. In fact, 30% of plans have auto-enrolled participants at 6% or more, up from just 17% in 2011, making it easier for people to garner positive retirement outcomes.
Next: America has more control over its future.
14. America’s retirement system is stronger today
The president of Investment Company Institute has some words of encouragement for those who might be concerned about their retirement nest egg. In a letter to the Wall Street Journal, Paul Schott Stevens says retirement income from private-sector plans, such as 401(k)s, has doubled since 1975. What’s better is the system is seeing a decreased reliance on defined-benefit pension plans, whose success rests solely on the strength of the company. Workers today have more control over their savings and ownership of results when looking at America’s retirement system as a whole.
Next: Confidence is key.
15. Americans are more confident than ever about the economy
Gallup reports America’s confidence in the economy is at an all-time high at the start of 2017. Such a joyful mood could play into the hands of future retirees hoping to cash in on their savings, as the stock market has seen a positive trend in 2017, as well. It might be time to do some trading while the market’s hot.
Follow Lauren on Twitter @la_hamer.