Are Your Savings Right for Retirement?

March 20, 2018

What are you doing to save for retirement? It’s probably not enough.

There are a variety of reasons you probably aren’t saving enough, but are they good enough to excuse causing yourself more hassle and pain down the road? According to a 2018 retirement savings survey, about 42% of Americans will retire without sufficient savings- not even $10,000. Women also lag behind men in retirement by as much as 5%, but it is still an improvement over past years- in 2016 63 percent of women had less than $10,000 saved, with a large section having saved nothing at all.

So what are the reasons for all of this poor financial planning? There are a few excuses, but the primary one is that you don’t make enough money to be able to afford to set some aside. However, one consideration is that when your money is saved in a tax-deferred account, like the cash value of an indexed life insurance policy or IRA, you are not paying income tax on that segment of your income, which can have the exciting result of reducing your paycheck by less than what you contribute to the fund. It may sound odd, but when you think about it, it makes sense- after all, if your income were, say, 10,000 dollars a year, and you contributed 1,00 of those dollars to the fund a month, assuming a 25% tax rate, your final paycheck would only be reduced by $75, but your account would grow by $100. Attach this to a good market with reasonable growth, and you would be in a vastly more comfortable position with, all things considered, a negligible charge per month.

However, if you are drowning in debt, whether it is a mortgage, credit card bill, or another loan, it should always be an essential priority to pay off these loans. But at the same time, there is no more significant loan than the one you’re paying to your future self- after all, if your debts are all paid but you have nothing to live on, your retirement will be a disappointment, and you will have nothing to fall back on in the case of a medical, family or another financial emergency.

Of course, everyone’s case is different, and not everyone can make these sometimes difficult decisions without the help of an expert. Talk to a retirement professional today and make sure that you know what you need to do to ensure you are financially ready for retirement.