Yesterday I was reading my Twitter Feed when I spotted a link on @breakingnews quoting a story on CNN Money that 43% of Americans have less than $10k saved towards retirement
The CNN story refers to a survey, conducted by the Employee Benefit Research Institute, that’s just been released which also said that 27% of Americans have less than $1000 towards retirement. (I’m assuming thus 27% is included in the 43% as that would be catastrophic)
The fact of the matter is that less and less people are saving for retirement (dropping from 75% of Americans to 69% in 2009). Which will end up forcing people to have to work much longer into the traditional retirement years.
Sure, the economy has a lot to do with this but also to quote the survey’s co-author Jack VanDerhei:
“People just don’t want to think about this,” said VanDerhei. “Everybody thinks they’re too young to think about it, until suddenly they’re too old to do anything about it.”
The point is that this is not something you can put off. The earlier you start saving towards retirement, the less you have to save each month, thanks to the power of compounding (interest earned is also subject to earning interest).
Consequently the converse of this is also true. If you start late, then you have to save to save more and you may have to radically re-address retiring to live on yacht. The truth of the matter is, that if you don’t start saving towards your retirement then you could be facing that you might be working until your mid 70’s to make ends meet.
You need to think about the sort of expenses that you’re like to experience when you reach retirement age. Will you have paid your debts off then? What are you planning to do with your time when you retire?
Financial planners suggest that you should be aiming for saving a fund to provide the equivalent of 80% of your pre retirement income.
Which may well translate into saving between 6-10% of your income towards your retirement. But of course that all depends on how old you are and the lifestyle you want to live.
No matter how old you are, you need to do something and do it regularly.
What’s your plans for retirement?