What would you do if you won $10 million? According to a recent Gallup poll, only 3 out of 10 American workers (31 percent) would quit their jobs. Two-thirds said they would continue to work, most at their same jobs.
I told my husband about this last night, and he guffawed. Kevin buys scratch-off tickets occasionally, hoping to win a weekly income of $2,500. That would set us up for life, he figures.
Of course, that's not our only retirement planning strategy; we do have a backup plan. But it would be a nice cushion in case we lose our nest egg to the ravages of time, the stock market or inflation, to name just a few menacing forces out there.
People not saving enough
Bankrate released its Financial Security Index results earlier this week, which found that Americans are slightly more optimistic about their personal finances in August than they were a year ago. In the areas of job security, debt, net worth and overall financial situation, Americans are more positive than negative. The lone exception: Sentiment on savings has shown a consistently negative reading since the survey began in December 2010.
In August, 35 percent of Americans say they are less comfortable with their savings levels than they were 12 months ago, while 18 percent are more comfortable.
Among retirees, 32 percent are less comfortable with savings while 14 percent are more comfortable than a year ago. The difference between retirees and workers, of course, is that workers still have a chance to boost their retirement savings while they're still drawing a paycheck.
This month, Bankrate's survey specifically asked if people were contributing more or less in their retirement accounts than last year. Nearly 1 in 5 (17 percent) are saving less this year than last year, as Claes Bell reports in his story, "Americans not juicing up retirement savings."
What to do
There are two ways you can juice up your 401(k) plan and individual retirement account: Save like mad, or invest aggressively, hoping for outsized returns. Investing aggressively works for young people, but the benefits lessen as you get older. People who wait until age 45 to begin saving for retirement will have a better outcome if they save 10 percent of their income and get 6 percent returns on average over 20 years than if they save 6 percent of their income and get 10 percent annualized returns, according to an analysis by professor Craig Israelsen, which appeared last month on Financial-Planning.com. His article, "Best way to increase retirement savings," explains that the benefit of compound interest diminishes the longer you put off saving for retirement. Also, investing aggressively exposes you to a lot more risk.
So just in case you don't win the lottery, save like mad.
Tell me, what would you do if you won the lottery? Would you continue working, or would you quit?
If I won $10 million, I'd give my employer at least two weeks' notice. ;-D
Follow me on Twitter: @BWhelehan.
Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.