If you’re still nowhere near what you'll need for retirement, don’t fret.
Two steps — delaying retirement until 67 and putting away at least 6 percent of your salary — can make a huge difference, according to new research from Morningstar.
Just those two actions could boost the chances that American households will have what they need in their golden years to 71.2 percent from 25.6 percent.
“It’s a tremendous improvement from these relatively nonextreme actions,” said Stephen Wendel, Morningstar's head of behavioral science.
The firm used a nationally representative sample of American households from the Fed's 2016 Survey of Consumer Finances. That included 3,916 households, excluding those in retirement or within a year of it, as well people who were unemployed.
The research looked at various actions that individuals and their financial advisors may take.
These two steps were helpful regardless of age, Wendel said.
“The age differences really aren’t as extreme as people talk about,” Wendel said. “In fact, contributions and delaying your retirement, lowering your standard of living, they are the most important for every age group, for younger and for older.”
That's because many older individuals have not saved enough, making contributing more and working longer “tremendously powerful,” Wendel said.
But there’s no single right fix for everyone, he added.
Take the default rate into retirement savings accounts such as 401(k)s. The most common number — 3 percent — is too low, Wendel said.
At the same time, uniformly saying everyone should save 9 percent will not work either. Some individuals would be saving too little, while others would be saving too much.
“The contribution rate should be personalized for the individual,” Wendel said.
And while the financial services industry needs to come up with tools to help do that, working with a financial advisor can help clarify what combination of choices will work for you personally, he said.
That potentially includes delaying retirement, increasing investment contributions or lowering your standard of living.
“It’s being willing to pull many levers a little bit rather than trying to do some heroic move and cut your standard of living to 40 percent,” Wendel said.
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