Truck drivers already work ridiculously hard to make ends meet, and for many retirement is too far away to be of immediate concern. Many assume their pension is going to cover their retirement needs. But as recent events prove, that is no longer a safe assumption.
Many union pension funds are cutting benefits because of severe underfunding has left pensions in danger of insolvency.
The Indystar reported in February of 2017 that New York truckers' pensions were cut by over 60%. Across the country the pension funds of retirees who have saved their entire lives are being brutally slashed. Despite protests, many current and retired truck drivers are threatened with up to 70% losses on their funds.
So even if you've carefully saved your entire life, pension funds can no longer be relied upon to provide you with a comfortable income in your retirement. Truck drivers' only options appear to be to save for retirement themselves if they want any real security.
Glassdoor reported that, "The national average salary for a OTR Truck Driver is $44,420 in United States."
With that salary you might be able to 'live comfortably' in a few select major cities in the US, such as Albuquerque, El Paso, or Detroit. Or even be able to put a little money aside in cities where the cost of living is lower.
But how much money does one have to save in order to fund most or all of their retirement?
Financial advisors generally say that the best time to start saving for retirement is in your 20's. So if, like most people, you've started thinking about your retirement in your 30's or 40's, you're already significantly behind.
One CNBC money expert recommends saving 25% of your overall gross income and keeping your spending at or below 75%. You should also include 401(k) withholdings, retirement funds from employers, and personal cash savings within that percentage. So that's over $11,000 a year for the average truck driver.
By age 30, you should have saved the equivalent of one year's salary. So a truck driver should have $44k in savings by then.
By your mid 30's your savings should be twice your annual earnings.
At 40, the recommended amount increases to three times your annual salary, and keeps increasing until by age 65, you should be sitting on a nest egg of eight times your annual salary.
In today's economy, even if you started in your 20's, most Americans would struggle to save this amount. Consider that many truck drivers don't even choose that career until after their 20's and certainly without the knowledge that they were going to have to fund their retirement themselves.
The solution to this problem will be covered in our next blog post. Bookmark this page or sign up to receive all the latest news!