How Behind Are Your Retirement Savings?

Many Americans report failing to put enough cash away for the future.

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If you’re like most Americans, you’re probably not saving enough for retirement. Most people – 57 percent – say they are either “a little” or “far behind” their retirement savings goals, according to a new survey by TD Ameritrade.

Excuses abound, but here are the most common ones:

Everyday expenses: Some 56 percent of respondents said they had “little or no money left” to save for retirement after paying for daily expenses, including food, housing, and transportation.

[See 21 Ways to Reduce Your Retirement Expenses]

Late start: The same percentage of respondents reported that they got a late start on their retirement savings. Starting late means losing out on years of compounding, which can have a severe negative impact on the final amount saved at retirement. For example, if you start saving $12,000 a year at age 25, you’ll have $3.2 million by age 65, assuming an 8 percent rate of return. If you save the same amount at age 40, you’ll only have $915,000.

Parenthood: Parents say that having children makes it more difficult to save money for retirement. About half of female breadwinners and four in ten male breadwinners said they scaled back their own retirement savings in order to put more money towards their children.

Longer life: Living longer is a good thing, of course, but it also means retirees need more money – enough to last into their 80s and 90s.

Do any of those reasons sound familiar? If so, it’s time to get cracking – and up your savings so you don’t face deprivation during what should be your golden years. The first step is to calculate just how much money you should be putting away.

Most people fail to do any sort of calculation at all, so this step will already put you in a better position. You can find a good retirement calculator with a quick web search, but be sure to use one that incorporates tax rates, inflation, and an adjustable rate of return so the results are as accurate as possible. Some good ones include TD Ameritrade's WealthRuler,'s retirement calculator, Transamerica’s worksheet. (See How to Pick a Good Retirement Calculator)

Once you’ve worked out just how far you’re falling short, it’s time to do something about it. Here are four suggestions:

[See 10 Cities for Retirement Property Steals]

Save more, not less. Most financial advisers say taking money out of the market when shares are down or you really need the cash is the wrong move, because you miss out on any future gains and compounding in the meantime. Plus, you might have to pay a penalty for early withdrawals.

Change your budget. Diane Young of TD Ameritrade says the biggest mistake people make is underestimating how much they can put away for later. "They're thinking they can't save more than they're already saving. But you can. You don't have to go out to dinner four times a week or spend $5 on coffee," she says. Even saving such a small amount pays off in the long run, she says.

Follow tried-and-true strategies. Diversify your investments through index or mutual funds, and decrease your exposure to stocks by shifting into safer vehicles such as bonds and cash as you approach retirement. A new survey from Vanguard found that investors are increasingly looking to low-fee funds, which keeps more money in their accounts.

Then forget about it. There’s no good reason to follow every dip in the market. Instead, focus on a hobby, get some fresh air, and spend time with friends.