INDIANAPOLIS, Ind. – Financial experts are warning a new crisis is looming and it could hit Hoosiers during retirement.
Studies have shown a majority of Americans aren’t saving enough for retirement and that could have widespread, long-lasting implications.
So CBS4 enlisted the help of Andy Mattingly, Forum Credit Union’s COO, to lay out exactly what Hoosiers need to retire a millionaire.
“It’s never too late,” he said. “It’s just much more difficult.”
And retiring a millionaire may not be what it seems:
- No luxury homes.
- No expensive boats.
- No expensive vacations.
Mattingly said for most Hoosiers to survive retirement, they’ll need at least a million dollars.
The end goal in this scenario is retiring at 65, bringing in about $4,500 a month, $1,500 of that coming from Social Security.
The easiest way to reach this goal, Mattingly said, is to start in your 20s.
Save $1,000 every month, put it into a 401K for example, and that will ensure you won’t ever have to increase your monthly savings.
“That is a lot,” he acknowledged. “And I think the thing is where people need to look, if I start with at least half of that number, I’m going to do at least $500 a month.”
The longer you hold off, Mattingly said, the more you’ll have to save.
If you enter your 30s with no savings, your monthly contributions jump to $1,600 a month.
“You can see you’re paying a little penalty by waiting,” Mattingly said. “But not a lot.”
The real problem, he said, comes in waiting until your 40s to start saving.
That must-save amount now jumps to $3,000 a month if you’ve ignored retirement that long. And from there it balloons dramatically.
“It’s not dire,” he said. “It’s just going to ratchet up. It’s just going to be a lot more.”
A 2016 study by Wallethub found Indiana ranks 37th nationwide for financial literacy, 49th for residents with a rainy day fund.
Because of that, Congress has even taken note.
“I think that folks have it top of mind that they need to save for retirement,” Rep. Luke Messer (R-Ind.) said. “But sometimes there may be more worry than action when it comes to our savings.”
Messer has formed an unusual bond with Sen. Elizabeth Warren (D-Mass.).
Their idea is to create an online ‘lost and found’ hub for all retirement accounts, which would make it easier for people to track their retirement when they change jobs.
“If we could get these accounts online and make sure folks had a place they could go to find them, there’s reason to believe it would make a difference,” Messer said. “Millions of dollars for thousands and thousands of people.”