Not much of a retirement saver? This is why you’re feeling FOMO


At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

More Americans are saving more money for retirement. And, millennials like Dorothy Smith are leading the way.

“My grandmother just passed away at 100 years old, so there is a real possibility that I, or my parents, might live a good many years after we are no longer working and bringing in income,” says the 26-year-old youth services specialist at a New York nonprofit. “So I don’t want to be left hanging.”

A Bankrate Financial Security Index survey finds 23 percent of all U.S. adults say they’ve ramped up retirement saving during the past 12 months — the best showing in six years of polling. And it’s younger millennials between ages 18 and 26 who are the most likely (at 30 percent) to say they’re saving more.

If you haven’t been stepping up your saving, Smith might provide some inspiration.

She had been steadily chipping into a savings account — first $100 a month, and more recently $150. In January, she started contributing 3 percent of her salary into her employer-sponsored 403(b) plan when she became eligible to receive matching contributions.


Why we’re saving more

A strengthening job market and auto-enrollment into company retirement plans have helped millennials get a head start on retirement saving, while older generations have had help fortifying their nest eggs from a steady-as-she-goes economy.

The unemployment rate has dropped to 4.3 percent — a post-recession low — while employers continue to add to their payrolls at a reasonable clip. Home prices have jumped, and various stock market measures continue to hit all-time highs.

“Working Americans are increasing their retirement savings more and more as the economic recovery continues, whether by saving the same percentage of higher earnings or a higher percentage of the same earnings,” says Greg McBride, CFA, Bankrate’s chief financial analyst.

Meanwhile, 5 percent of Americans say they didn’t save anything for retirement this year or last. That’s unchanged from our similar 2016 poll, and it’s still the lowest level seen in six years of surveying.

How to get going with your saving

Experts recommend that workers save 10 percent to 15 percent of their income for retirement, including any company match. When you start a new job and review your retirement benefits, consider increasing your rate of saving to meet the match. So, if your employer matches your contributions up to 5 percent, then you’d need to kick in 5 percent, too.

Make sure that you’ve opted into automatically increasing your retirement saving by at least one percentage point each year. You’re unlikely to miss the money, and it’ll help build your cache that much faster.

And stick with low-cost mutual or exchange-traded funds that track a broadly diversified index, like the S&P 500. If you’re a millennial or otherwise have a long investing time horizon, you need to devote only around 5 percent of your portfolio to bonds.

The challenge for some

Part-time workers are struggling to save. The survey shows they’re nearly twice as likely to have reduced (33 percent) rather than increased (17 percent) their saving for retirement.

One reason may be that they lack access to employer-sponsored retirement plans, like Dorothy Smith’s.

“Full-time workers between ages 21 and 64 are more likely to be offered a retirement plan compared with part-time employees, teens, and older workers,” writes Brookings Institute senior fellow Gary Burtless.

Due to low participation, the Trump administration recently chose to scrap myRA, an Obama-era program meant to help lower- and middle-income Americans save for retirement.

If you can’t rely on your boss or Uncle Sam to help you save, open a money market account today and take things into your own hands.

Graph: Financial Security Index, August 2017

Financial security improves

Bankrate’s Financial Security Index itself has rebounded slightly, from 105.3 in July to 105.8 this month — the third highest reading ever.

The index gauges how Americans feel about their finances by tracking their job security, net worth, comfort levels with their savings and debt, and overall financial situation. Any reading above 100 indicates improving financial security.

The survey was conducted by Princeton Survey Research Associates International. PSRAI obtained telephone interviews with a nationally representative sample of 1,002 adults living in the continental United States. Interviews were conducted Aug. 3-6. The margin of sampling error for the complete set of weighted data is plus or minus 4 percentage points.