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.Continue reading
Although several individuals reach the age where they’d like to retire, many of them simply cannot afford to do so and think it’s too late to try and remedy their financial situation. However, there are a few steps that can be taken in an effort to solve this dilemma.
Enlist the Help of a Reputable Financial Advisor
Trying to determine whether you’ll have enough money to retire with can quickly become overwhelming – to the point where many individuals simply give up and hope for the best. However, speaking with an accredited and reputable financial advisor should be your first course of action to take.
A financial advisor will take a look at your current savings strategies (if you have any) and then provide a plan of action that will involve you investing a predetermined amount of money each month into an appropriate retirement fund.
Consider Delaying your Retirement Date
Although you may have grown tired of taking part in the corporate rat race every day, you will have to ensure that your finances are in order before handing in your resignation.
Delaying retiring for a few years will not only allow you to continue putting money into your retirement accounts; waiting a few more years before claiming Social Security will mean that your checks will be larger as well. For each year that you delay obtaining Social Security payments, you’ll receive an additional 8% in benefit payments – up to age 70.
Evaluate your Current Lifestyle
Being able to afford to retire can sometimes mean that you’ll have to make a few changes to your current lifestyle so more money can be saved.
Take a look at your current budget to see where expenses can be reduced. For example, you might need to reduce the amount of money you’re currently spending on entertainment, meals out or even traveling. Now will also be the time to do everything you can to reduce or eliminate any debt you may have, such as credit cards and personal loans.
Reducing these expenses will enable you to invest more into your retirement accounts each month.
Consider Part-time Employment
If your only sources of retirement income will be Social Security and whatever you’ve managed to save until now, you’ll most likely have seen that a lot more money will be needed. However, this need not be the case if you’re willing to consider part-time employment after officially retiring. This will not only benefit you financially; it will help keep your body and mind active as well.
If you’re unfortunate enough to be behind on saving for retirement, it will mean that you’ll have to put in extra effort as soon as possible to try and catch up. Should you wish to discuss your retirement plans with a professional financial advisor, get in touch with us today. We look forward to helping you to better understand and manage your finances so that your retirement years can be something to look forward to.Continue reading
Now more than ever, people across the country are struggling to add to and maintain their retirement accounts. With inflation and the cost of living on the rise, however, this could prove disastrous. Here are three vitally important tips you should know if you want to retire richer without feeling the pain in the meantime.
#1 – Use Raises Wisely
There’s nothing quite like getting a raise at work. It’s a reward for remaining loyal to your employer, proving your worth as a valuable employee, and getting the job done. Though it can be tempting to improve your means with each raise, this will serve you well now, but it will do very little for you once retirement comes along. Instead of spending, try saving half the amount of your raise with each paycheck. For example, if your raise will increase your biweekly paycheck by $100, save $50. Logically, you were making it before the raise, and you should continue to make it after. Saving half still gives you half to spend, but it also cushions your retirement rather nicely at the same time.
The easiest way to do this involves boosting your 401(k) contributions so the funds are pulled from your paychecks automatically. This way, you’ll never even miss it.
#2 – Use Your Tax Refund Wisely, Too
Many people use their tax refunds to make big purchases, facilitate repairs, or even buy luxuries they wouldn’t be able to really afford otherwise. Rather than spending your tax refund in this way, consider investing half of it. Big chunks of money every single year are nice, and they’re even nicer when they’re earning interest. If you make $100,000 a year and you get a $2000 tax refund, then saving half of that refund is the equivalent of increasing your 401(k) contributions by an entire percentage point.
If you want to invest your whole refund, go for it, but don’t feel compelled to do so. It’s nice to have an immediate reward for all your hard work. Invest half and use the other half as you see fit.
#3 – Grab a Side Job and Invest the Earnings
Last, but most certainly not least, in today’s day and age, there are plenty of Americans out there who work second jobs or “side jobs”. Some people don’t do this out of necessity; for many, they’ve managed to turn their hobbies and passions into a paying gig. If this is the case for you as it is for millions of Americans, you can use this to your advantage and invest half the income into a high-yield savings account.
Arguably, not everyone working a second job can afford to do this; some work extra to make ends meet. If this does not apply to you, remember that working a second job and saving diligently could result in a much earlier retirement date.
The goal, as always, is to save money without feeling the pinch. You have to be 100% committed to putting money away for your retirement years in order to make it happen. The three tips above will undoubtedly boost your savings, and the best part is that you will still get to enjoy your raises, your tax refunds, and your earnings from your second job or hobby at the same time.Continue reading
When asked how much money they need to retire on, many people don’t have a clue. Those who think they have some idea are typically way off the mark. A recent Bankrate survey showed that over sixty percent of Americans answered they had no idea how much was needed to retire.
Of the people who did supply an estimate, they guessed around $650,000. The issue? These people are counting on a certain amount to roll in from Social Security payments – but that rate can change, and it – in all honesty – can’t be lived off without another source of income.
This same survey saw that almost half of people between the ages of 18 and 29 had no retirement savings, nor any solid plan as to how or when they will begin saving for life after work. This is a big issue, because saving enough to live comfortably in retirement requires planning early on – unless, of course, someone ends up getting lucky with a six-digit income every year between 35 and 65, while maintain a five-digit budget. That, of course, rarely – if ever – occurs.
What Is the Problem?
The problem isn’t just an economy only now on the rise after a big down slope. A survey by the Federal Reserve showed that barely half of all participants could answer five simple financial literacy questions correctly. With this, a correlation appeared between those who scored poorly and those who felt unconfident about their retirement prospects.
The problem is that there is no one valuable way to find advice on financial questions – nor any guide on how to properly save for retirement. The survey answers varied between actual financial advisors, family members, friends, online sources (such as calculators), and financial institutions like banks or credit unions. A substantial portion of people don’t go anywhere for guidance, and simply try to figure things out for themselves.
The other issue lies within the Social Security system. Many feel pessimistic over the future of the program, while others are relying too heavily on it for retirement. The truth? Approximately half of people currently in retirement depend on their monthly SSI checks for half or more of their retirement income.
What You Can Do
So how can you ensure you do your best to create a comfortable or at least livable retirement? The key is to start saving now, no matter your age. You should be placing about ten percent of your total income into a retirement account if you get an employer match. If not, aim for a minimum of fifteen percent. For couples, this is for each person’s income, which means couples would total twenty to thirty percent of their combined income in savings each pay period.
The more you can save, the better. At a minimum, you should have enough to cover your most basic living expenses for thirty years. This would allow you (and your spouse) to both meet your bills and use a small amount of money to enjoy yourself after work ends.Continue reading
Although many people look forward to retiring as a time to finally relax and do what they want with their lives, others are not so thrilled. Many people enjoy working. It gives them a sense of purpose and takes up a lot of otherwise empty space in their schedules. Unfortunately, everyone must retire at some point. Whether forced into it by your company or health care reasons, or pressured into it by your loved ones, retirement does not have to be a terrible thing.
The key to dealing with retirement when you don’t want to retire is to stay busy, thus filling some of the void left in your once-hectic schedule. Here are some great (mostly fun) ideas on how senior citizens can do just that.
Part-Time Job/Supplemental Income
One way to stay busy is to get a part-time job that allows you to work only one to two days a week. When receiving SSI, seniors can work a certain number of hours each week without losing their payments or having them reduced. For those who are still healthy enough to work, this could provide both a small extra income and keep you busy.
Volunteering is another wonderful way to fill some of your spare time, and many people find helping others gives them the same sense of purpose as working once did. Ideas of where or how to volunteer in your community include:
- Soup Kitchens
- Food Banks
- Community Closets
- Halfway Homes or Group Homes
- Free babysitting for family members or neighbors
- Schools, Nursing Homes, etc.
Maybe you never had time for your favorite hobbies during your working years. Now is the time to redevelop your love of whatever it is! Perhaps it’s fishing, hunting, gardening, carpentry, sewing, or something else entirely. If you’ve never had a hobby, now is the time to get one. Don’t feel pigeon-holed into “senior citizen hobbies” either. While you’ll probably want to avoid extreme sports, there is no reason you can’t learn to love something modern like video games! As a benefit, video games would also probably give you something exciting to do when the grandkids visit.
If you’re smart and save a little money back each week, you could use your golden years to travel the country. Go see all the places you never had time to see before. Everyone has at least one place they’ve always wanted to visit, so take the opportunity to do it. You can research cheap traveling methods, tips, and tricks online to learn how to travel on a budget. Saving a little money each trip you take could result in being able to afford an extra trip!
As much as we dislike admitting it, there are many people we simply haven’t had time for when we were young adults through middle aged. In addition to working, many of us were raising families. So take your golden years as a prime opportunity to revisit old friends and relatives.Continue reading
We all dream of an early retirement in a comfortable living environment, surrounded by the people we love. But as company culture changes and expenses change, retirement might seem further away than you’d have hoped. For some, retirement might even seem less appealing than work for fear of a lack of income.
Welcome in the new year with a new perspective on your retirement plan! Put saving on the top of your list of resolutions. Consider these tips to prepare for yourself for a happy and timely retirement.
Make a Plan
Many working Americans forget to think about their retirement. With the work grind and a busy schedule, it makes sense that retirement falls on the backburner when it seems so far away. Maybe you have a little bit of money trickling into your 401k every month, but you might not be taking advantage of a full-blown retirement plan.
With online retirement tools, you can check where you are with your retirement savings, and how far you still need to go in order to be comfortable in the future. Set up goals and read up on your company’s retirement plan policies. They might be matching your 401k contributions! If you have no idea where to start with your financing, there’s nothing wrong with asking for a little help. A professional financial advisor can set you up with a realistic plan that works for you lifestyle and your hopes for retirement.
Consider Your Stats
Different approaches to retirement are recommended depending on your age, income, the assets you own, and how old you want to be when you decide to retire. These are major components to developing your retirement plan. For example, if you’re only in your twenties or thirties, but hope to retire by the time your 55, aggressive contributions to your retirement plan are the way to go.
If you’re older, and retirement is just around the corner, it’s never too late to work on saving. Making small adjustments like flowing money directly into your IRA that you won’t miss now or downsizing on expenses that aren’t necessary can make retiring a lot less stressful than you think.
Ask a professional about the small things you can do in order to make retirement easier. With a proactive approach and an open mind, you’ll be ready for retirement in no time.
Think Positively about Retirement
Although retirement might sound like a scary place, it is ultimately the place you want to be in order to relax and be comfortable. You should be thinking of retirement as the goal rather than an unknown. It might be the time for downsizing or reducing expenses, but it is also the time when you don’t need to worry about work or income. You’re setting yourself up for a stress-free future.
Don’t let the hustle and bustle of a busy schedule let you forget about your retirement plan. Calculating your expenses and getting a better understanding of retirement only takes minutes. Developing a solid retirement plan may take longer, but there are plenty of resources out there to help you on your way!Continue reading
Many people these days wonder if they will be able to retire on time-if at all. These individuals often think that early retirement is entirely out of the question. That’s not the case, as it is still possible to retire early provided you keep the following things in mind.
Make a Plan
How early you can retire largely depends on the type of lifestyle you plan to live afterwards. As such, you should think about things such as where you want to live once you retire. Moving to a sunny location may sound nice, but if the cost of living is higher you will need to have a great deal more money saved.
Some other things to think about include:
- Whether or not travel fits into your retirement plans
- The amount of debt you will likely have once you retire
- The possibility of downsizing
- Additional expenses such as increased health care costs or the need to pay another person to help you out around the house
Who are you Responsible For?
Who you owe an obligation to will play a part in your retirement plans as well. For example, you may have a spouse or children who rely on your health insurance to meet their medical needs. Perhaps you have kids in college and need to continue working to help them pay their expenses. You should even consider your pets, particularly if you own larger animals such as horses.
Once you have determined how much money you need, you’ll then need to start accumulating funds. This may seem like an overwhelming task, but keep in mind that even small savings can really add up over time. Even if you can only put back a few dollars each week, make it a habit to start saving now.
Don’t be discouraged if you are already in your 40s and have not yet started saving. Look for little ways to cut costs so that you can add a few extra dollars to your savings account. Consider taking on a second job, or take advantage of the gig economy to earn yourself some additional cash. The most important thing is to do what you can while you can.
Pay off Debt
It can be nearly impossible to save money whenever you are drowning in debt. As such, you might find it necessary to pay off your debt before you begin saving. Speak with a financial advisor, who can put you on the right track to becoming debt free. Once you have eliminated debt, make a budget and stick with it to ensure you do not find yourself in the same situation again.
Retiring early does not have to be just a pipe dream. With the right planning, it can be entirely possible even for those who do not earn a great deal of money. You are never too young to start thinking about retirement. The sooner you start preparing, the younger you will be when you finally hit the time clock for good.Continue reading
The idea of retiring with a million dollars in the bank sounds like a dream come true. Even so, many experts warn that $1 million might not be enough for some people. A number of things can determine how far this money goes, so here is what you need to be aware of.
Geography Plays a Role
The leading factor in determining how far your money will last is location. Obviously, if you live in an area plagued with high rent and utilities, your retirement funds won’t last quite as long as they would in another location. For this reason, you may want to consider moving somewhere with a lower cost of living, particularly if you don’t quite have a cool million stashed away.
States in the Southeastern United States have a lower cost of living, and could allow retirees to live comfortably for longer. For example, $1 million will last approximately 26 years and four months in Mississippi, or an estimated 25 years and 6 months in Arkansas. However, that same money will be gone in only 11 years and 11 months if you live in Hawaii, or 16 years and five months if you reside in California.
Ways to Get By
Moving to a different location is not always feasible. That doesn’t mean you can’t maximum your retirement accounts. Financial expert Dave Ramsey claims the average retiree should have $1,157,000 in savings. Even so, he does say it is possible to retire on less than one million, and suggests the following things to help stretch your dollar:
- Paying off a mortgage, which can save an average of $9,000 per year.
- Cutting back on travel plans. Ramsey estimates the average senior spends $3,000 on travel.
- Knowing the tax ramifications of withdrawing from a 401(k) plan or IRA.
Ramsey also advises people to account for inflation when calculating how much they will need. As an example, he claims that someone planning to retire 25 years from now should have $2.2 million in savings to account for skyrocketing costs.
Length of Retirement a Factor
Of course, the length of your retirement will also play a role in how much money you need. Naturally, people who plan to retire at age 55 will require more cash than those who wait until they are age 70. Likewise, individuals who plan to work part time will not need to have quite as much stashed away.
Life expectancy and health are contributing factors as well. If your family has a shorter life expectancy, you might easily get by on far less than $1 million. On the other hand, if you have ancestors who have lived to be 100, you could find yourself running out of money well before you expire.
Not everyone needs a million dollars in order to retire. Even so, retiring as a millionaire should be a benchmark for working adults to achieve. Having that amount on hand can allow you to be financially secure and enjoy life to the fullest after leaving the workforce.Continue reading