Being “On the Road to Savings” can have so many meanings. I thought a post about retirement was long over due. Have you begun to think about securing funds for your retirement? This is often a subject that most people don't consider until time is no longer on their side. For us, saving for retirement was a battle. Between the 14.5%+ home interest rates of the early '80's, job loss, student loans, kids expenses and the everyday emergencies, it seemed we were constantly putting planning for our future on the back burner.
In effort to inspire you from making these costly mistakes, I have asked someone I have personally used for financial consulting to give us all some tips on retirement. Financial Advisor, Michael Maddocks has over 11 years of experience with helping people plan their financial future. Whether you are young and just getting started, planning for a child’s college or like us, and nearing retirement, it’s ALWAYS a good idea to sit down and get a professional's outside perspective. Find one you trust, that's realistic and be up front with them about what your goals are.
Michael shared a tool that will help you see where your needs are. It's called the “3-Minute Retirement check”. It's a great tool and it's super fast and easy. Just click on the “Try our 3-Minute Confident Retirement check” link, right under Michael's photo here. There are also, some great calculators on the website that can help you prepare for your kids college, get out of debt and more. He also, sent me this list of important things you should be considering.
The 6 crucial things to think about for Retirement
Should you be thinking about your Retirement?
The most common financial goal I have heard people express as their top priority in their financial plan is to secure a comfortable retirement. Unfortunately, some of these people start getting serious about retirement too late in life. A study released by the Federal Reserve1 shows that 19% of people between the ages of 55 and 64 have no retirement savings or pension. The study also shows that 41% of people between the ages of 18 and 29 said they have never thought about retirement planning.
Social Security Won’t Cut It
So, how do the people who do not have any retirement savings plan to pay for expenses in retirement? Over 74% of those 60 and older said they will rely on Social Security for their retirement expenses. Although, according to another study2, the average monthly Social Security benefit paid to a retired female worker in 2010 was $1,023 and $1,323 for a retired male worker. Unfortunately, the average household cannot ‘secure a comfortable retirement’ when relying on what little they will get from Social Security. This will result in one or both spouses exhausting all of their financial resources and turning to Medicaid to help them with housing and/or long-term care expenses.
Relying on other programs
The problem stems from a combination of a few incorrect mindsets that have been ingrained in society over many generations. The first is believing that you can rely on outside sources to build your retirement savings or fixed retirement income. Many years ago, quite a few employers provided a pension plan. Most of the time, this was offered automatically. If it wasn’t automatic, all the employee would have to do is sign a few forms and they’re enrolled. How easy is that? These days, very few employers offer a pension plan, but employees somehow still have an unconscious belief that working for an employer for many decades will yield some kind of retirement benefit. Now, you might be asking yourself, “What about 401(k)’s?” If your company offers a 401(k), I hope you have already been enrolled since day 1. Some people failed to enroll in their 401(k) because they were too busy filling out other paperwork when they were hired. Others didn’t know how much they wanted to contribute, so they held off – thinking they would enroll later. Possibly the main reason why people choose to not participate in their company provided plan is because they can’t afford to have more money taken out of their paycheck besides all the other deductions that bring your net income far below what you thought you would be earning.
Procrastination
The other mindset or behavior that plagues society is procrastination. How many people out there think they don’t need to start saving or planning for retirement yet? They probably think they have all the time in the world. They see commercials on T.V. and toys their next-door neighbors own and they end up sacrificing future plans for instant gratification today. Pretty soon, they will be within 10 years of retirement and only have Social Security to fall back on. At this point, people will start worrying about building up a nest egg, but how much can you really build up in that amount of time after missing out on years of dollar cost averaging, stock market growth, and compounding.
Start Now!
Do something today that will improve your situation. If you haven’t signed up for your company’s retirement plan, do so now. If you or your spouse are self-employed, open a self-employed retirement plan. If money is tight month to month, try to set aside at least $25 or $50 a month and then build that up as you are able.
Protect Your Savings
If you have already saved up a sum of money and you’re wondering how to protect it from market fluctuation, there are investment programs that can protect the principal while providing a steady income stream. You can add features to an annuity that can provide this benefit. This benefit is backed by the claims paying ability of the insurance company that offers the annuity.
You may think you have plenty of time to think about retirement. But you don't want to be in the position where you say, “I wish I had started saving earlier.” Do your future self a favor by putting more thought into retirement, get a plan in place, and save the right amount needed to get on track. I'm not saying you shouldn't enjoy your pre-retirement life, but try to find a balance so you'll be in a better position down the road. If you accomplish that balance, you will be able to secure a comfortable retirement.
Posted by Joani
My notes: This post was not paid for, sponsored by or solicited. I personally asked Michael to offer these tips because I know how important saving for your future is. I hope it inspires some of you to start making those important changes to your lifestyle. Contact info for Michael Maddocks.
1Report on the Economic Well-Being of U.S. Households in 2013, July 2014
2 Baby Boomers and Generation Xers, Are They on Track to Reach Their Retirement Goals?, Insured Retirement Institute, August 2012
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