Are You Having A Retirement Planning Crisis?

Most Americans are not serious about saving for their retirement, thus creating a retirement crisis.

Many people are quite aware of the problem, but don’t know what to do about it.    The time to get serious about a solution is not when you reach retirement age with no money.   To be able to accumulate enough money to afford to retire you will need your 40 working years from your 20’s to your 60’s.

You may not have figured that out yet.  Trust the financial industry statistics as proof that you will need your entire working life to save enough money to last your 30 years of retirement life.

Don’t Stress Out|You Need Retirement Planning Damage Control

Adjustments To Make In Your 50’s

  • It’s not too late to play catch-up

The thought of possibly reaching retirement age financially unprepared starts to hit people when they reach their 50’s.

In your 50’s you are over half way through your working years, actually closer to your retirement years.   If you have not started to save enough money you will have to either overload your retirement plan contributions or continue to work during your retirement years.    The choice is all yours.

  • retirement crisisUse a retirement calculator to determine how much money you will need to save in order to afford retirement.
  • Increase your retirement plan contributions at work to accumulate the amount indicate by the calculations from the retirement calculator.    You get help accumulating retirement money due to catch-up contributions.  Catch-up contributions allow investors who are age 50 and older to increase their contribution amounts.
  • Max out your contributions to take advantage of any employer match that may be available.   Employer contribution matches help you accumulate more money because an employer match is free money.
  • Invest money into a Roth IRA.   You will be using after-tax money so your contributions will be tax-free when you retire.

Adjustments To Make In Your 20’s & 30’s|Attitude

  • Retirement is not “that” far away.

Twenty and thirty year olds think it’s too early to save.  Even though it is never too early to save for your financial future, young people continue to use the excuse that they are too young to be thinking about “retirement” because it’s soooo far away.

When you are in your 20’s and 30’s you may think retirement planning is for “old people” – but you would be wrong.   The best time to start saving for your retirement is when you are in your 20’s and 30’s because you have time on your side.

In the financial world time is your best friend.

  • Compounding is a secret

The magic to compounding interest is that it uses time to work it’s magic.

Compounding is the financial secret that young people look for but few take advantage of.    If you start investing in your 20’s instead of waiting until your 40’s, you will have to save less overall due to the compounding of your money.

Compounding interest simply means that your interest earns interest on interest on interest.  More time invested in the market = more growth.

  • With right attitude retirement is not hopeless
Retirement planning is serious business

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Young people could be delaying their retirement planning because they may feel like retirement is hopeless for them.

The bad economy and high unemployment figures do not help ease their concerns about their financial futures.   The media also keeps grinding them of the hopelessness of their future.   With all that negative chatter, all they care about is finding and/or keeping their jobs.

  • Denial never gets you ahead

Twenty and thirty somethings are in denial.

They think that retirement will take care of itself.  They figure that social security will always be there as their back up plan.   Wrong, wrong, wrong.   Social security may be obsolete or bankrupt by the time 20 and 30 year olds reach retirement age.

  • Cut the instant gratification thing

Gen X’s and Y’s prefer instant gratification instead of long-term planning.   Instant gratification is easier because it feels good today.   Long-term plans take too long to get that feel good hit.

You’ll Need More Than Gut Instinct To Get You To Retirement

Your gut instincts will only take you far when you are retirement planning; you will also need to balance gut with systems.

The systems in place at many companies are there to help people steer more towards long-term retirement planning.   These systems take the emotions out of investing, thus help to avoid short-term feel good “lifts”.

Retirement Plan Automatic Features

  • It’s an automatic thing

Automatic enrollment into the 401k plan is the newest system at companies.

The way is works is when an employee begins their employment unless they can opt out at that time they are automatically enrolled into the retirement plan.

  • Eliminate the guesswork

Automated rebalancing is another feature being added to 401k plans to help take the guesswork out of investing.

The goal of rebalancing is to keep your investment mix the same; when that mix changes due to a change in the market the portfolio gets rebalanced back to the original mix.

You need to be the one to prevent yourself from having a retirement crisis.  You can do it with the right attitude, the right direction and the right focus.   No one cares about your retirement as much as you do (well maybe your mom does).