Are You Saving Enough for Retirement?
Retirement is supposed to be a carefree period of enjoyment and fulfillment. However,
retirement has become a daunting prospect for many Americans, full of anxiety and financial
uncertainty.
Longer lives and rising costs make the idea of retiring in one's 60s increasingly unrealistic. But
very few people, even those who enjoy working, want to work forever. At some point, we want to
retire and enjoy the rewards of our labor, whether that means traveling, pursuing new hobbies,
or spending more time with friends and family.
Your goals for your retirement accounts may also extend beyond personal needs to include a
comfortable future for your loved ones. Many Americans, however, have little or no retirement
savings and are worried about whether they can ever afford to stop working, let alone provide
for others after they pass. Some assets earmarked for retirement can also be vulnerable to
lawsuits, medical bills, and other creditor claims that can quickly drain decades of careful
savings.
A holistic, integrated plan that incorporates savings, asset protection, and legacy gifting can
help ease your retirement concerns and provide peace of mind for you and those you care
about.
How Much Is Needed for Retirement?
Americans are worried about their financial futures, and for good reason.
According to a 2025 Northwestern Mutual study, Americans believe they will need $1.26 million
to retire comfortably.1 However, that same study exposes a stark reality: this "magic number" is
far beyond what many have actually saved for retirement.2 More than half of Americans say that
outliving their life savings is a real possibility, and the vast majority are living with financial
anxiety.3
An analysis of eight surveys on how Americans feel about their retirement prospects reveals
that their anxiety ranges from a low of 32 percent to a high of 71 percent.4
Such fears are well founded. A 2024 AARP report found that 20 percent of adults aged 50 and
older have no retirement savings,5 while an Allianz Life 2024 survey found that less than half of
Americans have a financial plan in place for their retirement.6
How much money you need for retirement depends on your lifestyle, location, life expectancy,
and preferred retirement age. The commonly used 80 percent rule suggests replacing 80
percent of preretirement income annually. Fidelity's guideline is to save at least 1 times your
income by age 30, 3 times by age 40, 6 times by age 50, 8 times by age 60, and 10 times by
age 67 (the Social Security Administration's full retirement age for those born in or after 1960).7
Advisors often have their own guidelines about how much a particular person should have
saved and a personalized plan for how to hit that mark. Since numbers on a spreadsheet can
feel abstract and retirement goals and savings are not one-size-fits-all, talk with your advisor
about their specific recommendations.
Protecting Your Retirement Savings
Not saving enough for retirement could make you reliant on Social Security. However, Social
Security was never meant to be a full retirement plan. It typically replaces only about 40 percent
of preretirement income,8 leaving a significant gap that you will need to fill with personal savings
and investments.
Saving enough for a retirement that does not rely on Social Security is crucial, but protecting
your savings is just as important. Fortunately, some retirement plans have built-in protections.
For example:
- 401(k)s and other ERISA (Employee Retirement Income Security Act)-qualified plans,
such as 403(b)s and defined benefit pensions, are fully protected from creditors in
bankruptcy under federal law. Outside of bankruptcy, these plans are generally shielded
from creditors as well, although certain exceptions (such as Internal Revenue Service
tax levies, qualified domestic relations orders (QDROs), or criminal penalties) may allow
access. Once withdrawn, funds lose ERISA protection unless they are rolled over into
another qualified account, such as an individual retirement account (IRA).
- In addition, many states offer automatic creditor protection for IRAs and other retirement
accounts, but the protected amount and the strength of such protections vary widely by
state.
- While federal bankruptcy law does not protect inherited IRAs, some states provide
creditor protection for inherited retirement accounts through state exemption statutes or
bankruptcy-specific rules.
Protections for You - and Your Beneficiaries
The earlier you start planning and saving for retirement and the better you protect your
retirement savings, the more likely you will have money left over at the end of your life to leave a
financial legacy. That legacy will be further strengthened by building protections into your estate
plan that are aimed at reducing financial burdens - and concerns - for your beneficiaries.
Here are some points to keep in mind as you build your financial and estate plans and meet with
advisors:
- Inherited retirement accounts are not as well protected as when they were in the
hands of the original owner, especially since new rules require most nonspouse
beneficiaries to withdraw all the money within five or 10 years, making the funds more
vulnerable to taxes and creditors.
- Some states protect inherited IRAs from creditors, but many do not. At the federal
level, traditional and Roth IRAs are protected from bankruptcy up to $1,711,975 (as of
2025).9 In addition, these protections apply only if the assets remain within the IRA and
are not withdrawn.
- Naming a properly structured trust as your retirement account's beneficiary can
help shield the money from lawsuits, divorce, or bad financial decisions by loved ones.
Work with an experienced estate planning attorney to ensure that the trust is correctly
drafted to achieve these protections.
- Keep your beneficiary forms up-to-date to ensure that your money goes where you
want it to, avoids probate, and stays protected from legal disputes caused by outdated or
unclear paperwork.
The best remedy for retirement-related financial fears is a strong plan that considers known
risks and has the flexibility to take on unforeseen and unexpected changes to your savings. We
all have different plans for retirement and for reaching retirement readiness. Working with an
advisor can turn uncertainty into clarity, helping you build a retirement plan that not only grows
your savings but also protects them for you and your loved ones. To review or put a plan in
place, call us.
MEREDITH | PC
4325 Windsor Centre Trail
Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional Counselors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.
