The average retirement saver targets these 3 financial goals: how do you compare?


FThe end of retirement is a hot topic for Americans. In a recent survey, the Employee Benefits Research Institute (EBRI) asked workers aged 25 and older to name their highest-priority long-term financial goals.

Unsurprisingly, retirement-related goals top the list. Specifically, respondents said they wanted to save and invest, plan for their future health care needs, and strategize for their retirement income.

Data comes from EBRI 2022 Retirement Confidence Survey. The survey gathered responses from a total of 2,677 Americans ages 25 and older, including 1,545 working adults and 1,132 retirees. While workers and retirees weighed in on their top financial goals, the response metrics listed below are specific to working adults.

Could you pension plan benefit from saving and investing, planning for health care and creating retirement income? If so, keep reading to learn the easy steps to success for each of these goals.

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1. Save and invest

Six in 10 workers cited saving and investing as a top financial priority. If you share this goal, follow these steps to maximize your results in this area.

  1. Create a budget of your living expenses. Your budget allocates funds for saving and investing on a monthly basis. Additionally, the process of documenting expenses often reveals areas where you can cut back. For example, you may discover subscriptions that you do not need. Or, you might find you can live without spending $10 a week on fountain sodas. Add up these reductions and reallocate the funds to your retirement plan.
  1. Automate your investments. Set up a 401(k) or one IRA for automatic deposits. If this is already in place, look to increase your contributions and/or optimize your investment choices. Low-fee, large-cap index funds are popular, as are target date fund. Going forward, plan to increase your dues at least once a year.
  2. Don’t deviate from your plan. Sticking to your long-term plan is the only reliable way to achieve big wealth goals. Do not let turbulent markets or other short-term circumstances distract you.

2. Planning for future health care needs

About a third (36%) of workers wanted to plan for their future healthcare needs. A good plan here is to contribute (more) to a Health savings account or HSA.

If you have a high-deductible health plan, you can pay HSA 2022 premiums up to $3,650 as an individual or up to $7,300 if you have family health coverage. You would then invest those funds and let them grow over time – with the goal of building up a nice pot for retirement healthcare costs.

Contributing to an HSA is a no-brainer if you are eligible; the account allows you to use tax-free money to pay your medical bills. Your HSA contributions are pre-tax, investment earnings are tax-deferred, and medical expense withdrawals are tax-exempt.

Once you turn 65, you can also make taxable HSA withdrawals for any purpose without penalty. So if you don’t need the money for health care in retirement, you can just use it for something else.

3. Develop retirement income strategies

Three in 10 workers said they needed to build income stream for retirement. You can achieve this goal in different ways, such as:

  1. Dividend shares. Invest in stocks or funds that pay dividends over time. Reinvest the dividend income while you work to increase your earning potential faster. You can switch to cash dividends once you retire.
  2. Fixed income funds. Fixed income funds invest in debt securities. Repayments on the underlying debt fund the income paid to you as a shareholder. Go for low-risk funds so you don’t sacrifice reliability for higher returns.
  3. Annuities. A annuity is a stream of income that you can buy. You pay a sum up front – all at once or in installments – and receive a guaranteed series of cash payments in return. Be aware that annuities can be complicated and expensive. Research your options carefully.
  4. business income. A small business that can possibly operate without you is another option. You can create an e-commerce store or blog that you can then assign to an employee, for example.

Main retirement goals

The top three financial goals of American workers are interesting as a point of reference, but they also create a nice framework for a multi-faceted retirement plan. Saving and investing over time provides a basic level of financial security. You can improve your outlook from there by planning for future health care costs and developing an additional revenue stream (or two).

The financial work you do in these areas today sets the foundation for a relaxed, low-stress retirement tomorrow.

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