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Post: Retire Better: The top financial priority for most Americans? Just getting by

Saving for retirement, are you kidding? Most Americans say salting away cash for their the future isn’t a priority—and can’t be—given more pressing financial needs right now. 

That’s according to a study by the First National Bank of Omaha’s (FNBO) latest “financial wellness” survey, which interviewed 1,059 adults and was weighted to reflect the U.S. population. It says that in 2022, just 17% of respondents said that saving for retirement was their top financial goal, well behind the need to bolster current savings (the top priority of 40%) and pay off debt (30%).

This shouldn’t come as a surprise. Even before inflation took off—the latest consumer-price index (CPI) shows prices rising at a torrid 8.5% annual pace—nearly half of respondents, 46%, said they had less than $15,000 saved for retirement, and one quarter said they had less than $1,000 in overall savings.

When the very basics—food, shelter, energy—are all surging, it’s awfully hard to free up cash for anything but the here and now. Which is why it also should be a surprise that 59% of respondents worry that they won’t be able to retire by age 65.

What’s particularly dangerous here is that we may now be leaving what has been a lengthy era of low rates—and yet during that extended period, millions of Americans saved little. With inflation and interest rates headed north, it will be even harder.

The bank study indicates that people are shaving expenses wherever they can. Most, 94%, say they’ll ditch one of their streaming services and 64% plan to eat out less. Sizable minorities also plan to cut back on “clothes and personal items” (49%), technology upgrades like a new phone (43%), travel (40%), and “housing expenses” (31%). These things may help along the margins, but again, when the essentials are soaring, any savings from giving up Netflix or not going to the beach are likely to be swiftly absorbed elsewhere. 

“While it has been encouraging to see increased consumer interest in investing, saving and finances over the past two years, the numbers from our survey demonstrate the extent to which knowledge and proper guidance all play an invaluable role in helping to build a smart financial future,” says Sean Baker, a FNBO executive vice president. “An important first step is to develop a financial road map. We recommend identifying short-term versus long-term goals and seeking out a trusted financial adviser that can help pave the way to achieving those goals.”

That’s all well and good—getting a trusted financial adviser. In reality, however, most financial advisers are looking for clients with sufficient assets to generate fees. No disrespect, but they’re not Mother Teresa; they’re trying to make a living. They probably won’t even talk with you unless you’re coming in with money. Notes GoBankingRates.com: “Some advisers have minimum asset thresholds, which typically start at $100,000 — though some may require a minimum of $500,000 or even $1 million.” You might as well fly to the moon.

Responding to these realities, some big investment firms have slashed expenses and minimums for new investors. Among the bigger firms, Boston-based Fidelity touts a no-minimum investment for four index funds, which also boast a 0% annual expense ratio. An expense ratio is the percentage that you pay for an investment company to manage your money. Other big investment firms, including Vanguard, Schwab, T. Rowe Price among others, are also competing in the low-cost arena. 

Your employer may offer you the opportunity to save automatically through a 401(k) plan. If you’re not enrolled, please consider doing so. A little money is taken from your paycheck each month and invested is a very disciplined and automatic way of building up your savings. Unfortunately, many private-sector workers, particularly those working for smaller companies, don’t have access to such plans. This should change. You can always set up an individual retirement account (IRA) on your own. 

Enrolling in a 401(k) or setting up an IRA with an investment company doesn’t mean you’ll have access to personalized, detailed advice from a financial planner. But it does mean you’ll have access to general insights on market trends, asset allocation and so forth. If you can put aside even a few bucks a week for this—trust me, I know it’s difficult—you can begin to slowly focus on moving beyond surviving today to begin building the retirement you deserve.

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