Posted on 03/23/2019 8:02:04 AM PDT by SeekAndFind
There's a world of mystery surrounding retirement for those who aren't quite there yet. Still, one thing's for sure: Your golden years are apt to cost money, and if you want to live comfortably, you'll need the income to support your desired lifestyle.
But a frightening number of U.S. adults are making a major mistake that could destroy their chances of ever getting to retire in the first place: not saving for their golden years. A whopping 42% of Americans don't contribute to a retirement plan, according to the Center for Financial Services Innovation, and if you're one of them, you might be in for a rude awakening.
Many people don't save for retirement because they assume they don't need that much money during their golden years, especially if their mortgages are paid off by then and they don't have commuting costs to contend with. But when you think about the things you spend money on today, you might realize that most of them will still apply when you're older. Take home repairs, maintenance, property taxes, and insurance -- even if you're mortgage-free in retirement, there are other costs associated with owning a home. And if you choose not to own one, you'll need to pay somebody rent.
Then there's transportation -- you need a means of getting around town, whether it's owning a vehicle or paying for taxis, rideshares, or the bus. You also need heat, electricity, water, phone service, food, and clothing, just to list some more essentials. And don't forget healthcare -- the one expense that's likely to go up as you age.
That's why you need savings earmarked for retirement, and if you don't accumulate some, you're apt to struggle down the line. And if you think Social Security will suffice in paying your bills, think again. Those benefits are only designed to replace about 40% of your pre-retirement income (assuming you were an average earner), but most seniors need close to double that amount to live decently.
Remember, too, that in addition to the aforementioned necessities, you'll also need money in retirement to occupy your newfound free time. Not having enough of it to pay for things like cable, leisure, or the occasional vacation could turn your golden years into one extended period of disappointment.
The solution? Start carving out money each month to contribute to a retirement plan, whether it's an IRA or 401(k). You don't necessarily need to part with thousands of dollars each month (though the more you can save, the better) -- you just need to save enough to buy yourself some financial security and flexibility later in life. Check out the following table, which shows how much savings you might accumulate if you were to set aside a series of modest amounts over time:
|
Monthly Savings Contribution |
Total Accumulated Over 30 Years (Assumes a 7% Average Annual Return) |
|---|---|
|
$200 |
$227,000 |
|
$300 |
$340,000 |
|
$400 |
$453,000 |
|
$500 |
$567,000 |
TABLE AND CALCULATIONS BY AUTHOR.
Note that the above calculations assume a 30-year savings window, which means that even if you're nearing age 40 with no retirement savings to show for, you have a reasonable opportunity to catch up. And if you're wondering about that 7% return, it's actually a couple of percentage points below the stock market's average. If you have 30 years to invest your money, you should feel reasonably comfortable going heavy on stocks, since you'll have plenty of time to ride out the market's ups and downs.
Too Late!
Retirement?
I assume SS and the Government will take care of that, right?
Retire? That comes the day I die.
Unfortunately, very likely the same in my case.
The time of the wun pretty much destroyed me and I have had to rebuild from scratch.
,,,the day I Die.
I feel half dead now.
The time of the WUN?
My insulting name for the one I wasn’t waiting for and his Styrofoam columns, Barry of Kenya. Or wherever he is from.
You should work for the government. Fat pensions, gold-plated benefits, early retirement. Plus salaries well above comparable work in the private sector.
Save your OWN money for retirement? That’s for suckers.
My father had a massive stroke nine months after retiring, and died about four years later. Spent all the time in care unable to walk, speak, or use the right side of his body. I will never retire and if they think I’m dead they’ll get a shock at the funeral. I’ll be pounding on the casket lid shouting to open up because I have a deadline to make!
Every week I figure out how much money I can take out every two weeks. This is without my pension, or wife’s 401 k. When that number hits 80% of my salary, I work for six more months. And I am done. At this rate it is somewhere around 62.
7% annual return? That’s very optimistic. I may have got that a few times in 30 years.
I never made a lot of money never the less, I put aside 3% into a 401k, starting 35, raising it to 9% as I closed in on retirement. At the same time, I paid into a defined contribution pension and bought retirement medical insurance which now pays for my medicare and advantage plan.
I turn 70 next month. I play golf three times a week for money. My retirement job as a professional golfer sometimes nets me $10 dollars a day.
I would never have imagined I would get old, but it happened. My advice: live beneath your means, save for a rainy day and do strength training regularly.
My fake investment advertisement ..... never get a social security number, mow lawns for cash 3 days a week, 4 months a year , live within your means and retire a multi millionaire at age 45. If that doesn’t workout whack a few dozen polidiots and presstitutes and retire to a beautiful modern one room suite at ADX Supermax in beautiful Florence Colorado ......
My mom was a teacher and my Dad a high middle manager at the post office. Their pensions are OK. But no SS.
Their healthcare was OK, but not free.
Now mom is in Skilled nursing. She runs out of money this month. The cost is $9K above her combined pensions. She’s been retired for twenty five years.
If you are going to live to your nineties...there is NEVER going to be enough.
My experience is that if everything is "in place" and one stays up on physical and mental well-being, you'll be surprised how far money can stretch in retirement.
Investment Strength Indexed Universal Life Insurance
I pick an actuarial death at age 80. Without a death date the math is too complex. If I survive past the date and have to go bakrupt, I will either go on the dole or on a wild rampage until stoped by the authorities.
I can always adjust my death date and redo the math.
There’s nothing wrong with dying penniless. In fact it’s a sign of both great timing and a hell of a budget.
In general I agree but a 3% interest rate(fixed) on a mortgage is free money in today’s world. I wouldn’t pay it off.
My retirement plan: death.
I’m amazed at retired people who have mortgages!!!
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