Most people do not prepare for retirement. This is especially true in the United States. People in the US seem to think that their company pension, if they have one, is secure, or that the government will take care of them. Or, they do not think about retirement at all.
The average American person aged 55-64, just prior to retirement, has accumulated only $69,127 toward retirement. And that figure only applies to those who have retirement accounts of some type. Many have none and have saved nothing.
The first two myths to dispel is that any retirement benefit is secure. Headlines for years now have demonstrated the fallacy of that. No one should count on a pension fund as their sole source of retirement income.
The second myth is that the government will take care of you. At best current Social Security Retirement benefits are bare bones. According to the Social Security website Social Security was never meant to be a sole source of support in retirement, which is true. The site further advises that most people cannot count on Social Security benefits of more than 40% of their earnings at retirement. (See: http://www.ssa.gov/pubs/10024.html )
Imagine if your income were cut by 60% tomorrow. How well would you fare? Could you keep your home? Your car? Pay all your bills?
Most people could not. And as the number of retirees increases and the proportionate number of working people paying into Social Security decreases, the likelihood that this amount of support will continue is debatable.
What to do-
If you are young, that is under 40, begin saving for retirement NOW. Do not wait another moment. The earlier you start to save the better off you will be. Also, do not put all your eggs in one basket. Save in several places. The amount you save depends on how much you have coming in and how old you are. The older you are the more you must save. An 18 year old who starts saving only $100 a month and never touches it can have a nice nest egg by age 65. A 40 year old will not.
If you over 40 in addition to aggressive saving for retirement you may want to develop plans to reduce your after-retirement expenses, such as paying off your home mortgage well before you reach 65 and avoiding any further deep indebtedness.
There is a lot more you should be aware of and a lot more you should plan for and do. The worst thing to do is nothing. Pretending this is not your problem or that you cannot do anything about it is a big mistake that you will pay for in your old age.
There are many sources of good advice out there on retirement planning. One is from a book we featured some time back, The Smartest Retirement Book You’ll Ever Read by Daniel Solin.
Read Solin’s book as a good place to start. Continue to educate yourself. Remember that no one cares about your financial security or retirement as much as you do.
Wishing you Success and Prosperity,Wishing you well,
Daniel R. Murphy
Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.