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Not saving enough -- or at all
Once you sign up, figuring out the best amount to contribute is the next hurdle. Not surprisingly, most people don't contribute enough.
According to Webb, the average contribution rate is 6%. Combined with a typical 50% match from the employer, the average employee saves 9% of salary annually.
"If the employee started (saving) at age 22 and contributed every year to age 66, that might possibly be enough. But if you add in gaps, late starters, etc., then the calculations that we have done at the Center (for Retirement Research) show that 9% is really, really not enough," says Webb.
If 9% is not enough, 0% is much worse. A recent survey by financial services organization TIAA-CREF found that 80% of those asked were not contributing to an IRA and nearly half, 43%, could not even identify an IRA correctly.
Reasons abound why investors arrive at retirement with less than an optimal amount. One person may have endured a massive, uninsured health problem; someone else may have experienced a prolonged period of unemployment. Many people simply just do not save enough.
Whatever the reason, those who come up short may find they need to work longer and save harder than someone who started saving in their early 20s.
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