A recent survey from the Employee Benefit Research Institute reveals that a significant number of Americans feel they are falling behind in preparing financially for retirement.
Personal finance expert and philanthropist Tony Robbins has issued a strong caution regarding this reality. He emphasizes that the key to making up for lost time in saving and investing for the future begins with a crucial step that many have not yet taken.
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According to the survey, 88% of current workers expect Social Security to play a role — either major or minor — in their retirement income. However, most also anticipate supplementing their earnings through additional sources, such as employer-sponsored 401(k) plans and Individual Retirement Accounts (IRAs).
This is a key consideration, as the average monthly Social Security benefit for retirees, which stands at approximately $1,900, often falls short of what people hope to maintain in terms of their post-career lifestyle.
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The survey also found that 84% of workers expect to receive income from a workplace retirement savings plan such as a 401(k), 68% foresee drawing from an IRA, and 77% plan to rely on other investments and personal savings.
Robbins urges workers to acknowledge the realities of retirement savings and take proactive steps to secure their financial future without delay.
A man in retirement is seen teeing off toward the sun on a golf course. Tony Robbins explains a formula for determining the amount of money Americans need for retirement and shines some light on important 401(k) facts.
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Tony Robbins warns U.S. workers on Social Security monthly benefit fact
Robbins is direct in his critique of Social Security’s shortcomings when it comes to funding the typical American’s retirement.
He has made it clear that relying solely on Social Security for financial stability in retirement is a risky move — a vital fact he believes could lead to serious financial hardship.
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“Social Security was never intended to become a replacement for retirement savings, especially considering the extended length of retirement we can anticipate with longer lifespans,” Robbins wrote.Â
Robbins warns against the dangers of procrastinating on retirement savings, emphasizing the importance of taking action early. He advises people to assess their financial situation using simple math, which can help them understand where they stand and what they need for the future.
He believes that proactive financial planning is far more effective than reacting to challenges later, stressing that a clear understanding of the amount required for retirement is essential for building a solid financial strategy.
Robbins argues that retirement planning should be based on actual spending rather than income. For those who spend more than they earn, he suggests using expenses as the foundation for planning while also working to reduce unnecessary costs.
Many people may not have a clear grasp of their yearly expenses, but Robbins notes that tracking spending is an easy habit to adopt. Careful monitoring can reveal areas to cut back, helping increase retirement savings.
He recommends multiplying yearly costs by 20, estimating that this number represents how many years a person might need financial resources in retirement.
Robbins urges a realistic approach to retirement planning, cautioning against irrationally optimistic assumptions while advocating for practical, forward-thinking financial decisions.
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Tony Robbins highlights key 401(k) plan fact
Robbins expresses deep concern about the impact of rising taxes on retirement savings, emphasizing that increasing tax rates over time could pose a serious challenge for those preparing for their future financial stability.
He advises people to make the most of employer-matched contributions to their 401(k) plans, highlighting this as an essential strategy for maximizing savings.Â
In his book Money: Master the Game, Robbins explains a key fact: Employer contributions are essentially free money, making them a valuable opportunity for workers.
Given the likelihood of higher taxes in the future, Robbins encourages those who have the option to consider selecting the Roth tax treatment for their contributions.Â
Unlike traditional 401(k) plans, where taxes are deferred until retirement, Roth 401(k)s require taxes to be paid upfront, but withdrawals later in life remain tax-free.
In a discussion he had with Dr. Jeffrey Brown of the University of Illinois, Brown reinforced Robbins’ concerns, stating that tax revenue demands in the future will almost certainly increase, making proactive financial planning more critical than ever.
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