62% of Americans need to catch up on retirement savings

If you're lucky, you'll have several distinct sources of retirement income that will come together to buy you a comfortable lifestyle. One such source will likely be Social Security, assuming you worked long enough to pay into it. Another source could be earnings from a part-time job you hold down during your golden years. And, hopefully, an additional source will be your personal retirement savings.

In fact, ideally, your personal savings should be substantial, since Social Security is only designed to replace about 40% of the average earner's pre-retirement income. Most seniors, however, need about twice that amount to keep up with their essential expenses and have enough money left over for modest luxuries like occasional travel, leisure, cable and dining out.

TD Ameritrade's 2019 Retirement Pulse Survey, however, reveals some troubling news: An estimated 62% of Americans are behind on retirement savings. And though that sentiment is more prevalent among millennials and Gen Xers, a good 51% of baby boomers say the same, which is problematic since many are already on the verge of retirement and don't have much time to catch up.

If your nest egg isn't looking as robust as it should, it's imperative that you take steps to do better. Here's how to tackle that shortfall based on the age group you belong to.


If you're on the younger side and are behind on savings, there's really no need to panic, since you have plenty of time to build a nest egg. At the same time, don't delay any longer, because if you do, you may be forced to make major lifestyle cuts later on to compensate.

For now, start by going through your budget, or creating one if you don't have one yet, and identifying a few expenses to cut back on. That could mean ordering in less frequently, packing your lunch instead of buying it daily, walking or taking public transportation instead of paying a premium for rideshares, and canceling cable if you mostly rely on streaming services anyway.

These modest but realistic steps could free up a good $300 a month for you to sock away in a retirement plan, and from there, if you invest that money at an average annual 7% return (which is doable with a stock-heavy portfolio), you'll have about $498,000 after 35 years. That's not a bad sum to retire with. Sock away $400 a month, meanwhile, and you'll be sitting on $663,000 more than you had before.

Gen Xers

If you're midway through your career, it's time to get serious about retirement. You may only have about 20 years left until that milestone kicks off, and you'll need to set aside a pretty substantial amount of money each month to boost your nest egg significantly.

Where will that money come from? In addition to making lifestyle changes, it pays to consider getting a second job. You can use the earnings from it for retirement savings purposes, since they won't be earmarked for living expenses.

Now, imagine your lifestyle adjustments free up $300 a month, and you're able to earn another $400 from a side gig. If you then sock away that $700 a month over 20 years at an average annual 7% return, you'll be sitting on an additional $344,000 for retirement. Make it $1,000 a month by working more on the side or living even more frugally, and you'll boost your nest egg by $492,000, assuming that same 7% return.

Baby Boomers

If you're a boomer who's behind on savings, here's some potentially harsh news: You're really going to have to commit to serious lifestyle changes in the next few years if you want to retire comfortably. And you'll probably need to look at getting a side job to generate more earnings. That side job, however, could come in handy in retirement if your savings are short, or if your expenses come in higher than expected, so it's not a bad thing to have either way.

Let's imagine you're able to sock away $1,200 a month over the next 10 years. The result will be an additional $199,000 for your nest egg, assuming the average annual 7% return used above. Furthermore, if you extend your career by another three years, and therefore save $1,200 a month for 13 years, you'll boost your savings by $290,000 (assuming that 7% return once again).

Don't Let Your Savings Fall by the Wayside

Acknowledging that you're behind on retirement savings is an important step toward catching up. But it's not enough. If you want to enjoy your golden years to the fullest, you'll need to make that nest egg your priority in the coming years. But as the above examples illustrate, if you commit to that goal, there's a good chance you'll more than make up for your current savings deficit.


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