Almost Half of All Americans Are Headed for Retirement Disaster. Here's How to Make Sure You Aren't One of Them

In 2022, 54.3% of Americans reported that they had at least some assets in a retirement account, according to the Federal Reserve. While it's good news that just over half of Americans have money in a 401(k) or another retirement plan like an IRA, that also means close to half don't have this type of account to help save for their futures.

Sadly, for those Americans not working on retirement savings, disaster could be on the horizon. Here's why.

Not having a retirement account could be a major problem

If you don't have any money in a retirement account, that probably means you aren't saving for retirement -- or, at least, that you aren't taking advantage of tax breaks designed to help you do so. Either of these scenarios isn't very good.

See, if you aren't saving for retirement, you're going to be in financial trouble when you stop receiving a paycheck. You'll most likely get Social Security benefits if you worked for at least 10 years in the U.S. (or if you qualify based on being married to someone who has worked for long enough). But Social Security is only designed to replace about 40% of pre-retirement income.

Reducing what you're bringing into your household by 60% is going to lead to drastic -- and most likely unpleasant -- changes in your living standards. Most experts recommend trying to replace a minimum of around 70% of what you were earning, and you need to have retirement investments to help you do that since Social Security alone just won't cut it.

If you're saving for retirement but not using a retirement plan, you're missing out on valuable tax breaks that could help make your saving efforts more successful. Several different retirement plans allow you to take a tax deduction when you make contributions, including IRAs and 401(k)s. If you're in the 22% tax bracket, each $1,000 you put into these accounts (up to annual contribution limits) could save you up to $220 in taxes.

You don't want to pass up this government help, so you should be putting your retirement savings in one of these plans.

How to get started saving for retirement

The good news is, if you are on track for a retirement disaster because you aren't investing in a retirement plan, you can get off that track. You just need to start investing today.

If you have a workplace 401(k), you can do that by signing up for the account and arranging to have contributions made out of your paychecks. Talk to HR or your plan administrator to find out how to sign up. Ideally, you should contribute about 10% to 15% of your income, but if you can't do that, start small with 1% or 2% and work your way up. Your company may match your contributions, which can be a big help, so ask if that's the case and try to contribute enough to earn the full employer match.

If you don't have a workplace 401(k), open an IRA at a brokerage firm. Most brokers allow you to sign up online by providing some basic details about your identity. Once you've signed up, arrange to have contributions transferred out of your bank account and into your brokerage account on payday. Then, invest the money in something simple like an exchange-traded fund (ETF) that tracks the performance of the stock market (your broker should have screening tools to help you find one).

You can't afford not to save for retirement, so take these steps now so you don't end up facing a disaster that's hard to recover from.