Save yourself: Are you thinking about retirement?
Save yourself: Are you thinking about retirement?
Even if you’re a proud business owner and you love what you do, chances are you’re still looking forward to retirement. For many people, retirement means traveling the country, taking a grandma-worthy foreign trip, or simply having time to sit down with a book that’s already on the list. read for many years.
Some look forward to it so much that, they set aggressive financial goals and work long hours, with the intention of retiring early. Others are not so regimented, clinging to typical retirement savings rates and shooting for retirement at 63, average retirement age United States
Some fell short the other way, or underestimated the amount of savings they would need for retirement, or failed to save for other reasons. Regardless of those reasons, the result is black and white: not enough savings to retire at 63 and perhaps, not even enough to retire. When.
The harsh reality of retirement savings in the US
QuickBooks Payroll recently conducted a survey to better understand how people spend their paychecks. They asked 1,000 working adults about their finances and retirement plans.
Here’s what they found:
- Only a fifth of survey respondents (18%) feel they have enough money saved for retirement.
- When asked how long they could live on their savings if they lost their job, 23% said they didn’t have any savings.
- Another 26% say they will run out of money in less than a month.
- In the end, when they got their paycheck, only 16% said they put their money aside for the future.
Only about a fifth of respondents said they had saved enough for retirement. The source.
ONE Washington Post article in 2017, titled “The New Reality of Aging in America,” paints a more personal story with these statistics, featuring elderly couple Joanne and Mark Molnar and Jeannie and Richard Denver. They are just two examples of couples of retirement age living from paycheck to paycheck, long after most people hope to get the job done.
Like most people over 65, the Denvers get Social Security, but it’s only $22,000 a year — not nearly enough to live on without other income. So this couple adopted a nomadic lifestyle, going from campsite to campsite, working odd seasonal jobs in exchange for low wages and a place to park their 33-long RV their feet. According to the Washington Post, there are 9 million elderly people working today, compared with 4 million in 2000.
Can the next generation close the gap?
The sad thing for the Denvers, the Molnars and millions of people like them is that time is running out to create a retirement savings strategy that works. It’s a bit of a cliché, but it’s true: You’re never too young to start saving for retirement.
For some young people, saving for retirement can seem difficult or impossible, simply because there is so much to think about. Does talking to a counselor cost money? Is there a minimum savings required to get started? With so many account types out there, which one is best for you?
“There is no minimum [to invest],” speak Kymberli Grime, CPA and owner of KG Services, PLLC. It is the opposite. “There are maximums for certain investment vehicles within a year,” she explains. “Starting is the biggest obstacle. Once someone starts and sets it up on an automated payment type system, that doesn’t happen. If they can spend their money to put down just $100, $200 or even $50 a month, that’s huge, especially the young people in life. That compound into a beautiful egg nest until they reach retirement age, depending on how the money has been invested.”
One of the hardest challenges, says Grime, is getting into the habit of not increasing spending every time income rises.
“What we saw was a treadmill response,” she said. “People spend what they have, and then they get a raise and they spend what they have. Unless someone makes a commitment to put some of their income aside, I find that a lot of people end up increasing their budget to match what they earn. ”
Options for young people to save
If you can put some money aside, it can be helpful to know that retirement savings don’t necessarily start with a 401(k) or Roth IRA matching corporation. Young savers can put a portion of their birthday or weekly allowance into an Education Savings Account (ESA) or a simple savings account to learn the basics of banking.
When children are old enough to work and earn their own income through babysitting or part-time work, they can contribute to a kid-friendly IRA, such as the one described in this piece of time. Basically, a parent can open an account and donate money to it or a child’s earned income to encourage the child to save.
Grime says that parents can also help their children by putting money aside Plan 529, specially designed for college savings. “It’s basically a state savings plan,” she said. “Parents can set aside money for the benefit of the child, and if for some reason your child does not use it [for college], it comes back to you. The rules vary from state to state, but most allow parents with funds for their 529 plans to be tax-free.
Next steps: who will you call?
As with any goal, it helps to have an accountability partner who can help keep you on track for success. In the case of retirement savings, it could be your accountant, a financially savvy friend or family member, or a financial advisor.
No matter where you go for retirement savings advice, it’s important that you seek knowledge in the first place. Do that, and you’ll be ahead of the curve.