You haven't put much money into retirement savings and now that you're nearing the traditional retirement years, you're watching with dread as your portfolio drops in value following Russia's invasion of Ukraine.
Do you share these feelings?
Wishing that you had started saving for retirement earlier in your career when you could easily harness the power of compound interest and time?
You're far from alone.
The Federal Reserve's Report on the Economic Well-Being of U.S. Households 2020 notes that among non-retirees surveyed ages 45 to 59, a majority (83%) reported that they had some kind of retirement savings. But only 40% thought they were on track with their retirement savings.
Don't be glum if you're among the worried 60%. Many older workers have an opportunity to improve household finances when the kids leave the home for good.
As any parent knows, kids are expensive. Cash flow is freed up when they leave to start their own households and launch their careers. Problem is, the data shows most parents don't take advantage of the opportunity.
Why parents don't save more is the question explored in a new report— "Do Households Save More When the Kids Leave: Take Two" — from the Center for Retirement Research at Boston College. (The report builds on an earlier study that took a narrower focus on the issue.)
In essence, they didn't find an increase in retirement savings or debt reduction when the kids are gone. They did uncover a drop in consumption in the 3% to 6% range, as well as a reduction in hours worked. Empty nesters embrace working less and enjoying their leisure time more.
The study is intriguing on its own. But the personal finance implication in the data is clear: If you're concerned about your finances in retirement and you're a parent, seize the financial chance to save more and pay down (or eliminate) debts when the kids leave.
There are additional steps to take that can improve retirement readiness with planning.
Look into reducing costs associated with big-ticket items like your home. Perhaps the time is near when you should sell the larger home you raised your family in and downsize into a smaller place that's cheaper to maintain.
Since the desire for more stuff typically moderates with age, it's psychologically easier to embrace a thrifty or frugal mindset.
Near-retirees worried about their financial readiness for the next stage of life shouldn't despair. There is plenty of time to plan and act.
Farrell is senior economics contributor to American Public Media's "Marketplace" and a commentator for Minnesota Public Radio.