Top 5 Retirement Roadblocks and How to Clear Them

A disturbing number of Americans are speeding toward a financial cliff called retirement. Unless they change their saving habits, they may well barrel over the edge and land in poverty.

About 42% of Americans have saved less than $10,000 for retirement, according to the 2018 Retirement Savings survey by GoBankingRates. The federal poverty level for a household of two is $16,460.

Unless they start setting money aside and get their debt under control, that means that almost half the retired couples in America will be out of savings a few weeks after they retire. And that means their golden years are going to be severely tarnished.

“We all know that strategic and disciplined savings and investments are important in achieving retirement goals,” said Dr. Rui Yao, an associate professor of personal financial planning at the University of Missouri. “However, we don’t see this happening.”

A study by found that 20% of Americans don’t save any of their annual income. And those who do aren’t putting enough away.

Only 16% or respondents said they save at least 15% of their income, which is the recommended level. The prospect of a future living off Social Security and eating Ramen noodles for dinner apparently isn’t enough to overcome present-day financial pressures.

» Learn More: How to Prepare for Retirement

Why People Aren’t Saving For Retirement

  • I won’t need retirement savings.
  • I don’t make enough money to save.
  • I’m prioritizing paying down debt.
  • My job doesn’t offer a savings plan.

Let’s address each of those.

  1. I won’t need retirement savings.

Maybe not if you plan to work until the day you die or have a rich Uncle Milton who’ll pay your bills. If you’re counting on Uncle Sam via Social Security, forget it. You will need savings – lots of savings! – to maintain your current lifestyle.

The average Social Security payment in 2018 is $1,404 a month. That works out to $16,848 a year.

Healthcare costs alone are estimated to be $8,000 a year for the average healthy 65-year-old. That means you’d have $737 a month left to cover rent, food, clothing, transportation, and all other expenses. Good luck with that.

About 30% of would-be retirees haven’t paid off their mortgages when they hit 65. When you add all those expenses, you’d better have a rich Uncle Milton if you have no savings.

  1. I don’t make enough money to save.

This is a tough one since it’s so easy to get overwhelmed just trying to keep up with monthly bills. The best way to squeeze out some saving is through budgeting.

Write down your expenses and challenge yourself to spend $50 less a week on food, gas, entertainment or other fluctuating expenses. And consider finding a part-time job or other way to increase your income.

This takes determination and discipline, which isn’t necessarily fun or easy. But even a little bit of savings adds up over a long haul. And it becomes easier to save the more you do it.

  1. I’m prioritizing paying down debt.

This one makes sense. Debt doesn’t magically disappear when you hit 65. If anything, paying down debt after retirement becomes more burdensome because income typically decreases.

And the worst part of all is that unpaid debt increases on its own due to interest rates. The greatest multiplier of debt is the evil credit card.

Credit is not necessarily evil, but the way people use it can certainly bedevil their financial lives. Millions of consumers with heavy credit card debt have found help through debt management programs.

Nonprofit organizations consolidate your debt, help lower interest rates and reduce your overall monthly expenses. Certified counselors also set up long-range budget plans to keep you out of debt.

If you’re not debt free by 50, give a debt management program a try. Debt management typically takes three to five years to complete, but they can set you up for a lifetime of saving.

  1. My job doesn’t offer a savings plan.

The rise of self-managed plans and demise of traditional pensions is an irreversible trend people will just have to deal with.

Only 13% of retired private-sector employees have a retirement plan with guaranteed benefits. That’s down from 20% in 2000.

Pension plans have been replaced by 401k plans and individual retirement accounts known as IRAs. A study by University of Missouri researchers found that 29.4% of millennials who work for companies have some kind of retirement account, while only 17.6% of self-employed had a retirement account.

“Millennials will have to assume more of the responsibility in preparing for retirement,” said Yao, who headed up the study. “Therefore, this generation should participate in direct contribution plans and/or open an IRA to help fund their retirements.”

The study said people find self-managed accounts burdensome and complex, and many consider their self-run businesses to be their retirement accounts. But less than 30% of such businesses are successful in the long run.

Academics like Yao are studying ways to change people’s savings behavior. One detriment is the fear that money put into savings will not be accessible for big-ticket items like mortgages or college tuition.

They need to understand there are a variety of savings plans designed for those expenses.

“We can reduce the fear of saving money into an account that you can’t use,” Yao said.

Whether people feel fearful or overwhelmed by bills or hopelessly mired in debt, ignoring the problem is not going to make it go away.

Retirement is coming whether we like it or not. It doesn’t have to be a cliff that sends you careening into poverty.

Joey Johnston has more than 30 years of experience as a journalist with the Tampa Tribune and St. Petersburg Times. He has won a dozen national writing awards and his work has appeared in the New York Times, Washington Post, Sports Illustrated and People Magazine. He started writing for InCharge Debt Solutions in 2016.

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    1. (Huddleston, C.) (2018, March 6). Survey Finds 42% of Americans Will Retire Broke – Here’s Why. Retrieved from
    2. (Tepper, T.) (2018, March14). Despite an improving economy, 20% of Americans aren’t saving any money. Retrieved from