As you go off to your job each day, it’s hard to picture how retirement will look. You probably cannot imagine a world without work and what that would be like. Know that it is coming, though, and it’s time you asked yourself if you’ve gotten yourself into a position to enjoy looking forward to the end of your working days rather than dreading it because you’ve completely ignored retirement planning.
Your Problem is Not Unique
This may or may not make you feel any better, but if you haven’t been saving for retirement, you’re not alone. According to data provided by The Motley Fool, not having a proper retirement program is almost a way of life in this country. Consider that:
- 1 in 3 Americans has nothing saved
- The average 50-year old has only $60,000 saved
- Only 18% say they are confident they have enough
Pay Yourself First
Why is it that so few of us are bracing ourselves financially for the inevitable? One of the reasons is that people look at the money they have going out the door every month for rent or mortgage, insurance, car payments, food and various repairs and it’s no wonder that they don’t see any room in there for retirement planning. This is a logical conclusion – unless you look deeper.
If you make the all-important step of prioritizing your retirement and paying that fund first, then that money is off limits to all other spending before a single bill has been paid for any other purpose. Understand that you have already adjusted to the fact that your take-home pay doesn’t include the taxes and Social Security deductions that have been removed. That money never gets into your hands and you have learned how to do deal with its absence. Now, what you need to do is make it the same way for your retirement savings: have the money deducted automatically so that you never see it in your take-home pay.
Sure, that money won’t buy you any consumer goods -- but it will buy you peace of mind.
Get Professional Help
When you have a medical question, you go to a doctor. If you self-diagnose, you run the risk of making your condition worse. The same applies to your finances: seek the help of a licensed professional to get you on the right path. Certainly, there are some home-grown financial wizards out there who know what to do, but they are rare. Dave Ramsey tells us that 45 percent of workers simply guess at the best approach to investing for retirement. Is there any wonder that estimates put the gap between what Americans should have saved for retirement and what they actually have at somewhere between $7 and $14 trillion? Get started on the right path by talking to someone who spends their workday helping people like you get their retirement planned properly.
Don't Play the Market; Use It
Unless you’re some kind of Wall Street savant, bear in mind that your retirement investments are for the long haul, not for short-term gain. The professional you consult will best explain how long-term savers succeed best when they ride out the usual highs and lows associated with building a portfolio over time. You’re not a day trader, after all – you’re an investor in your own future.
Get Rid of That Student Debt
You’re already aware of how much your student loan debt is cramping your style, but here’s some more incentive to pay it down as fast as possible. According to the Motley Fool, if you have $30,000 in student loan debt, it can mean $325,000 less in retirement savings. So, that loan is blocking your future and you must work to rid yourself of it before your retirement plan can show any real progress.
Get That Free Money
This question is addressed to the one in four of you (the American average) who do not participate in your company’s 401k program: Why are you leaving free money on the table? Your employer is willing to give you cash for your future. Do yourself a favor and meet or exceed the matching requirements and avail yourself of that tax-free windfall.
Social Security: A Misnomer?
Here’s a scary fact courtesy of the Motley Fool: “47 percent of single seniors and 22 percent of married couples depend almost entirely on Social Security” (for their retirement).
The average Social Security payment amounts to about $1,342 per month. If you’re relying exclusively on those checks to get you through your golden years, they are not going to be very golden. Without getting into hypotheticals about the future solvency of the Social Security system, it’s safe to say that even if it survives as-is going forward, what it pays out only provides for the most meager of existences. If you want to have anything above and beyond that – travel, meals out, gifts for your grandkids – you’re going to have to have an alternate plan in place. Social Security should be treated as nothing more than gravy on top of money you’ve put away by other means.
The Scariest Thought of All?
Why is it so very important to worry about and plan for retirement? Because a large percentage of us never quite get there. No, that doesn’t mean we die before we turn the traditional retirement ages of 62, 65 or 67; it means we are often driven out of the work force before we can retire on our own terms. According to Motley Fool, 55 percent of current retirees stopped working earlier than expected either because of health reasons or job loss.
For those who have been saving properly for retirement, these early exits are a bad blow to be sure, but at least their planning will help cushion the blow. For those who have left it all up to chance, an early exit from the work force can be nothing short of a disaster, for they are caught in a financial middle ground of being too young to collect even the paltry stipend that Social Security offers.
There is no time like today to review your retirement planning status. If there’s nothing there, get started – and the older you are, the more urgently you must act. If you’ve put something aside, but haven’t given it a great deal of thought – then it’s time for a serious review. If you’re one of those people who reads this piece and recognizes themselves as someone who has done everything right, then good for you. You’re what we all should want to be.