Failing to Put Money Aside for Retirement

More and more people are failing to put enough money aside towards their retirement. Research is showing that only 51% of people are setting aside enough money to provide an adequate income during retirement. The worst thing is that 14% of the people are not saving at all!

The second you earn an income, you should put some money aside for retirement. It isn’t that hard, just make saving a priority. You should start as early as possible and you should make saving automatic. Instead of waiting to contribute your IRA (although saving your tax returns isn’t a bad thing), you should set an amount deducted automatically from your paycheck each month.

How much you save varies with age. The general rule is the younger you are the more aggressive you should be at setting money aside. Why you may ask? If you put money automatically in a savings account you learn to life on what is left over. After a while you won’t even miss it. The younger you do this, the more easily it will be (your income will normally grow the older you get.)

Of course we understand that if you are young you think that retirement is a long time away, but the time to start saving is when you are young. Think about it. The younger you are, the longer time you have to save, thus to reach a certain amount you have to save less each month. To reach the same amount when you start ten years later you need to put in much more each month. (Make a calculation for yourself, then you will understand what we mean.)

Some general rules to long-term financial health:

  • Make a plan.
  • Open a savings account.
  • Consider setting aside 10% of your gross pay each month. (Automatically if possible.)
  • Pay of debts as soon as possible.
  • Setup an emergency fund.
  • Only use credit cards in emergencies.
  • Pay with cash. (This way you know more easily what goes out.)
  • Make use of 401k(s) if possible. (Automatically payments if possible.)
  • Stick with it!

One last thing

Don’t count on anyone else but yourself, not even on the government. The world is changing all the time. For instance people live longer and will spend more time in retirement. When all the Baby Boomers retire, the government will be forced to change Social Security. So don’t count on that the Social Security will be the same in the future. Make sure you have set aside enough for retirement yourself!

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