Why so Many Individuals Cannot Afford to Retire

Several individuals look forward to the day when they’ll no longer have to wake up to an alarm clock and spend eight hours a day stuck inside an office. However, this idea is little more than a dream for a number of older individuals who have fallen short of being able to save the money they need to retire. Below are some of the reasons why so many older individuals aren’t able to afford to retire.

Seniors are Hoping to Work for Longer

A number of older individuals haven’t saved money for retirement because they had hoped to continue working throughout this time of their lives – either full-time or in a part-time capacity. However, these intentions often don’t go according to plan, with more than 50% of individuals being forced into retirement sooner than they’d hoped because of health or employer-related issues. 

One Third of Seniors Have No Savings

Up to a third of Americans have not set aside any savings for retirement, and the majority of those who have been saving are still far behind where they should be. Several reasons were provided for this deficit such as:

  • Prioritizing repaying student loans or starting college savings accounts for children
  • Having too much consumer debt that prevents money from being saved
  • Planning to rather save larger amounts of money at a later stage in life instead
  • A general lack of desire to start saving

Reduced Focus on Saving

Most financial experts strongly recommend having a minimum of 70% of your annual income saved before retiring. However, research has revealed that the amount of individuals who are actively saving money has declined rapidly over the past 30 years – to the point where up to 50% of Americans cannot come up with $500 to cover the cost of an unplanned emergency. One of the main reasons why people are saving less nowadays is that many of them have experienced income reductions that prevent them from being able to even cover the bare necessities. 

Higher Cost of Living

Even people who were under the impression that they were setting enough money aside for retirement could find themselves falling short because of continually rising living costs. Economists have warned that seniors throughout the country don’t have enough money saved to sustain their current lifestyle. Residents of Hawaii, Alaska and South Carolina seem to be faring better than seniors in other states such as New Jersey, North Dakota, Minnesota and Massachusetts. 

There are a number of reasons why individuals who are close to retirement age or are in the process of retiring don’t have sufficient savings to carry them through this time of their lives. In many instances, simply recognizing the reasons why they haven’t got enough saved is the first and most crucial step towards sitting down and compiling a plan that will at least help them to have a little extra cash set aside for when they’re no longer able to work.

If you have fallen behind with retirement savings or you’re unsure how to go about starting to save for this crucial time of your life, contact us today. 

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Why a Detailed Budget is Crucial for Financial Success

Many individuals think that if they can simply earn more money, they will automatically be better off financially. However, many households that are earning six-figure incomes have found that they are still struggling to make ends meet because they haven’t taken the time to compile a budget that would allow them to see where their hard-earned money is really going. 

If you’d like to ensure that your finances work for you over time, now is the time to compile a detailed budget.

Help Control Spending

When you use money without having a budget in place, there’s nothing to stop you overspending. Although you may have a basic idea of how much you’re spending each month, it’s too easy to overspend without having accurate figures on hand. 

When you and your spouse sit down and compile a list of where all of your money has been spent, you’ll quickly be able to see which categories of your budget are prone to overspending. For instance, you may find that your daily takeout lunch habit is setting you back to the tune of a few hundred dollars a month.

Achieve Financial Goals

Regardless of whether your goals involve having a good-sized emergency funs, paying for your child’s college fees or enjoying a dream vacation, having a detailed budget will help ensure that you’re able to allocate funds to the life events that matter most to you. For instance, knowing that you have an emergency fund will reduce stress levels in the event that anything goes wrong because you won’t have to worry about how you’ll be covering an unexpected expense.

Avoid Debt and Improve Credit History

Your budget will help you identify areas where overspending is taking place, which will in turn help you avoid racking up unnecessary consumer debt. If you have already accumulated high levels of debt, a budget will help you identify areas where spending cutbacks can take place and the savings incurred from them can then be put towards repaying your creditors. 

Compiling your Budget

When compiling your budget, you’ll need copies of bank statements as a starting point. These will allow you to see exactly where each dollar has been spent in previous months, making it easier to determine where spending reductions can be made. For instance, your bank statement will show how many times you purchased takeout in a specific month or how many subscriptions you’re paying for.

Once you have your bank statements on hand, carefully check to see which expenses are being deducted from your account – in some cases, a subscription you canceled a while back may still be getting charged to your account. If your expenses exceed your income, spending will have to be reduced – many households can trim expenses by purchasing cheaper grocery items, canceling unused memberships and only purchasing clothing when absolutely necessary. 

If you’re struggling to compile a workable budget or you’d like to obtain financial advice from experienced professionals, contact us to set up an appointment today. We look forward to assisting you.

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retirement planning

What is the Right Time to Start Retirement Planning?

A commonly asked question when it comes to retirement is, “When is the right time for me to start planning for my retirement?” If you’ve only recently started climbing the career ladder, you may be thinking that you’ll still have a lot of time before you need to start preparing. However, if it’s one thing financial experts agree on, retirement planning should always start sooner rather than later.

Your 20s 

The concept of saving for retirement can seem virtually impossible when you’re still in your 20s because you may have just recently started a career and not be earning a decent wage yet – or you may still be struggling to repay student loan debt and think you don’t have enough cash left over to still invest for retirement. Alternatively, you may have other goals at this time of your life, such as starting a family – causing you to push retirement planning further away than you should. 

Below are just a few benefits you’d be able to enjoy if you start saving towards retirement in your 20s:

Take Advantage of Compounding Interest

Every year, your money will earn interest in two ways – on the money you’ve saved and on any interest earnings that you received in previous years. This means that the earlier you start saving, longer you’ll be able to take advantage of two forms of interest being earned towards retirement.

Enjoy Tax Savings

By placing your retirement funds into an IRA or Roth account, you’ll be able to take advantage of tax deduction of up to $5,500 for each year that you make these contributions.

You won’t have to Catch Up on Contributions at a Later Stage

Individuals who don’t make any contributions towards retirement savings during their 20s and 30s usually only realize how far behind they’ve fallen when they reach their 40s or 50s. By the time this happens, they will have to contribute a far higher portion of their earnings each month to ensure that they’ll actually have enough to live on when they’re no longer working.

Develop Healthy Savings Habits

If you make it a priority as early on as possible to start saving for retirement – and any other emergencies that may arise from time to time – you’ll develop good spending habits that will help prevent you from needing to borrow money if times get difficult. 

The Case for Starting to Save Later in Life

If you’ve waited until your late 40s or even 50s to start thinking about saving for retirement, you may be thinking that it’s too late to do anything about it. However, there are several reasons to get started, even if you intend to retire in the next five to 10 years. 

  • Most individuals reach their highest earning potential at this time of their lives
  • Several employer 401 (k) plans allow employees over 50 to contribute more money than younger employees

In short, it’s never too late to start saving towards retirement. If you would like to find out how to get started, contact us today to schedule an appointment with one of our financial advisors. 

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Overwhelmed by Credit Card Debt? Take these Steps to Improve your Finances

The aspects that consumers love the most about credit cards are safety, convenience; being able to track spending and often earning rewards are unfortunately the same qualities that cause so many people to accumulate high levels of debt on them. 

If you’re unfortunate enough to have accumulated large sums of credit card debt, chances are that it’s leaving you feeling overwhelmed and stressed because you think that you’ll never be able to repay it all. However, the good news is that there are effective strategies and tips that can be implemented to help ensure that you’re able to repay every last penny in full.

Target One Card at a Time

Although minimum monthly payments will be required on each of your credit cards, paying a little extra over and above this amount on the card that carries the lowest balance will help lower its balance just that bit quicker. Once this card has been paid in full, take the amount you were paying on it each month and add it to the minimum payment amount on the next card in line to be repaid – and keep repeating this strategy until all credit cards and store cards have been paid in full.

Request Reduced Interest Rates

In many cases, getting the interest rate reduced on a credit card can be as easy as contacting the issuing company directly and asking – provided that you either have a fairly decent credit score or you’re a long-term client that always makes payments on time. 

If any of your other credit cards have lower interest rates, be sure to inform the customer service representative that you’re dealing with – in many cases, they will at least be able to match it.

Transfer Balances to Interest-Free Cards

These days, many new credit cards offer interest-free introductory periods to customers who want to transfer credit card balances over to them. Interest-free timeframes can range anywhere from six months to as long as 18 months in some cases.

While this is an excellent strategy to use to save on interest charges, keep in mind that you will need to commit to repaying the balance in full before the introductory period expires. Failure to do so can result in hefty interest rates being billed on outstanding balances.

Commit to Not Accumulating More Credit Card Debt

Once you’re on the journey to get all of your credit cards fully repaid, it’s crucial that you not take on any further consumer debt. After everything has been repaid, you’ll usually be able to start saving a portion of your income each month that can either be put towards an emergency fund or invested in a retirement fund. 

If you’re feeling overwhelmed by the amount of debt you’re carrying and aren’t sure how to go about putting a plan of action into place to repay everything, contact our financial advisors today. We look forward to being able to assist you with becoming financially independent over time. 

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