73% of Americans worry Social Security will run out before they retire, survey shows
Here's how you can prepare for retirement by paying down debt and building your savings
Transamerica conducted a survey to learn more about workers' retirement savings plans — here's what they found. (iStock)
Americans are losing confidence in their ability to cash in on Social Security benefits in retirement, according to the 21st Annual Transamerica Retirement Survey.
Nearly three-quarters (73%) of U.S. workers are concerned that Social Security will not be there for them when they retire, although 21% expect to rely on Social Security throughout retirement.
Less than a quarter (24%) of workers feel "very confident" in their ability to retire comfortably, the survey showed. They've saved a median of $93,000 in all household retirement accounts, which is far below the amount that experts recommend consumers should have saved. As a result, the majority of consumers (57%) plan to work in retirement, either on a full-time or part-time basis.
"Despite the immediacy of the pandemic and its challenges, it is remarkable that workers are maintaining a focus on their future retirement," Catherine Collinson, CEO and president of Transamerica Institute, said. "Nevertheless, many are still at risk of not achieving long-term financial security."
Keep reading to learn more about the study's findings, as well as how you can better prepare for retirement. And to help you achieve your retirement goals, you can also visit Credible to compare a wide variety of financial products, such as debt consolidation loans and high-yield savings accounts.
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Half of workers said debt holds back their retirement savings
About half of workers (49%) surveyed by Transamerica reported that debt is interfering with their ability to save for retirement. Additionally, one in six respondents (17%) said they accumulated new credit card debt due to pandemic-related financial strain.
Still, 62% of consumers cite getting out of debt as a financial priority amid the COVID-19 pandemic:
- 40% want to pay off credit card debt
- 31% want to pay off their mortgage
- 16% want to pay off student loans
Credit card debt can be an expensive burden that inhibits consumers from achieving other financial milestones, including saving for retirement. Making the minimum payment on your credit card balances may keep you out of delinquency, but it comes at the high cost of credit card interest rates.
It may be possible to pay off credit card debt on better terms with a debt consolidation loan. This is a type of personal loan that you repay at a low, fixed rate in consistent monthly installments. The average two-year personal loan rate is 9.09%, according to the Federal Reserve, compared to 16.44% for credit card accounts assessed interest.
If you've made it a goal to pay off debt before retirement, you can visit Credible to compare rates on a number of financial products, including debt consolidation loans, mortgage refinancing and student loan refinancing.
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Emergency savings are ‘alarmingly low’
An emergency fund is an important safety net that can help workers avoid tapping into their retirement savings or taking out high-interest credit card debt for unexpected expenses. Nearly half (45%) of survey respondents said that building their emergency savings is a current financial priority.
It's recommended that consumers have a robust emergency fund that covers about 3 to 6 months' worth of expenses. And while the median emergency fund among U.S. workers is $5,000, the study found that lower-income Americans haven't saved nearly as much. Workers with a household income of less than $50,000 have just $250 saved for emergencies.
If you've made it a goal to build your emergency savings, consider setting up a Direct Deposit from your paycheck into a high-yield savings account that earns interest. You can compare savings account rates for free without impacting your credit score on Credible.
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