Do you want to retire rich or do you want to retire dead?
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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?
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I only have about $5000 in my superannuation (401k for US people?), but I am only 23. It is something I always have in the back on my mind, but as I am pretty much fully self-employed with a temperamental income I kind of just push it aside.
I guess I hope that I am making enough passive income by the time I retire to do it on my own terms.
.-= Tom | Build That List´s last blog ..The 4 Reasons People Unsubscribe Mailing Lists =-.
Matthew Needham Reply:
March 11th, 2010 at 2:51 pm
Hi Tom,
It seems like you’re making a great start. Especially at such a young age. The problem that most people face is they make too little provision too late. So the very fact that you’ve done something about it is fantastic!
Good luck to you!
Matthew,
I’ve recently requested a current transfer value of my pensions; this is for other reasons but I’ll be able to assess my pension value and use it to inform any other investments I need to make.
A timely post, thank you.
Regards
Paul
.-= Paul´s last blog ..It’s only skin deep =-.
Matthew Needham Reply:
March 11th, 2010 at 2:56 pm
Funnily enough Paul, I’m about to do a similar thing having a number schemes over the years.
In fact it reminded me of how many things I’ve taken out over the years and have possibly lost track of. I had been storing some documents at my parents, which they recently returned to me. I was surprised to see there were a few things in there I’d forgotten about, including a couple of old bank books, which had deposits in them!
Which has made me determined to set up a spreadsheet with everything on – which will be the subject of another post!
Thanks for your comment, as ever Paul.
I personally have a tiny pension. I pay into the teacher’s pension scheme but as a part time supply teacher, the amount going in is negligble.
That said, my husband pays something like a third of his salary into the police pension scheme. He tells me that we’ll be well provided for so I trust him and my head remains in the sand
.-= Eleanor Edwards´s last blog ..The rudder that’s steering your ship =-.
Matthew Needham Reply:
March 12th, 2010 at 7:55 am
I understand that Police officers can retire at 48, so there needs to be a large fund in place to cover the potential 30+ years not working.
Maybe you will have retired by then due to your internet fortune?
Eleanor Edwards Reply:
March 13th, 2010 at 9:53 pm
Hi again Matthew,
I missed your reply until now. That made me laugh! All of my work right now is for the third sector so no personal fortunes there
Having said that, I did meet with the business manager in my local Barclays yesterday. I told her about the ideas I had and she was very enthusiastic. She works totally with start-ups so could be a great contact too
I meet with her again next week to open my own business account. Scary or what?! Very exciting too though 
.-= Eleanor Edwards´s last blog ..BMyCharity? Apparently not =-.
Matthew,
Yeah, it’s a huge issue here. Well, saving in general, esp. how thing went down in 2008. I only have my savings account and plan on growing it, but I need to look at serious solutions soon.
.-= Moon Hussain´s last blog ..Clash Of The Titans: Pros & Cons of Various Types Of Passive Income Streams =-.
Matthew Needham Reply:
March 19th, 2010 at 8:08 am
Thanks for your comment Moon. Savings is a huge issue, which I’m sure we’ll be worrying about for years to come.
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