For some strange reason, I think about retirement a lot. Am I the only one? It reminds me of George Costanza from Seinfeld, the episode of “The Old Man”:
Ben: I’m not afraid of dyin’. I never think about it.
George: You don’t? Boy, I think about it a lot. I think about it at my
age. Imagine how much I’ll be thinkin’ about it at your age. All
I’ll do is keep thinkin’ about it until it drives me insane…
Maybe it’s a blessing and a curse. I need to cut back in terms of thinking about it so often, but at the same time, there are many out there who need to start thinking about it a lot more. We may think that earning a paycheck is a reward for a job well done at work. What about when we’re not receiving that paycheck anymore in our retirement age? How about a job is well done for all those years we continued to work? Shouldn’t we pay our future selves a bit: “if only there were a way to actually see yourself as a 73-year-old retiree who wishes your younger self-had saved more.” This article also talks about the human behavior in wanting a reward right away rather than waiting.
Retirement Saving – You’re Responsible
Back in the day retirement was easy, pensions were more common as people could retire and move to their dream community. Nowadays, most people overestimate how much they’ll receive from social security and underestimate how long they will live. And chances are people won’t want to give up their standard of living during retirement either; actually, we’ll want to enhance it. Conservative planners may want to use 100 percent of their income for retirement. In terms of dollars needed, $1.2 was an average presented in the book Crash Course on Money Smarts: 15 Laws of Managing Money and Creating Wealth (Crash Course Series).
But guess what? Despite all the burden falling on us, companies are still trying to make it easy to save for retirement. Thanks for automatic enrollment, “according to a 401(k) benchmarking survey issued by Deloitte Consulting LLP, 42 percent of 436 companies examined use the automatic enrollment feature in their company retirement plans.” This is a great feature because when you’re hired you are automatically enrolled. You have the option of leaving the program if you don’t want it.
Most people, however just stay in it which is great because it’s automatically investing for them. Even though this automatic feature is available, we still have to do more like picking the right investments/funds, try to increase by a little each year if we can, and speak with a professional every now and then to make sure our retirement fund is on track. If not make adjustments accordingly.
Retirement Saving – What’s The Excuse?
70% of all the people in the U.S. who have the option of opening a 401k at work totally ignore the option according to Dr. Koenig. People want to enjoy life now, live in the present, tomorrow is not promised to anyone, we can get hit by a bus (seriously I’ve never heard in the news someone actually being hit by a bus – could still happen though).
But it’s not all on the employees either, many employers don’t offer a retirement plan at all and this makes it even easier for employees to either ignore or find a reason not to have a plan in place. Per CBS News, small employers are concerned about the fiduciary liability they accept under the Employee Retirement Income Security Act….and don’t the resources to evaluate retirement offerings and navigate requirements.” The article concludes that it’s ultimately up to the employees whose employers don’t have retirement plans set up to research, shop, and select plans. Their employer or the government is not going to help, at least for now.
The truth is for most people, there are always unexpected expenses that come up. Retirement, however, is expected an inevitability, so it makes sense to save consistently for an event you know will happen in the future.
How to Start Retirement Savings Today
If you don’t have a retirement plan at work,
Then go to your bank and open an Individual Retirement Account (IRA).
If your bank doesn’t offer an IRA,
Then open an account at another bank (I know Bank of America) has one. On a side note and a hack for people, I went there to speak to someone about retirement about a year ago. I already had a retirement account, but wanted to just get some free advice from a retirement professional.
If you can’t contribute a lot,
Then sit down and calculate all your income and expenses and see how much you can (even if it’s $20, $25, $50) a month.
If you don’t know what to invest in,
Then consider a target fund based on when you think you want to retire (you can change your options later if you decide to do so because these types of funds do tend to have higher fees than ETFs and Index Funds).
If you’re afraid of the stock market and that you may lose money that you invest,
Then buy into a fund that is diversified will minimize this risk. Yes, you may lose a little bit every now and then, but over the long-term, you’ll be better off invested in a retirement account rather than sitting on cash (and it tempting you to buy something for now instead of the FUTURE you).
So if you’re not saving for retirement, now there are really no good excuses. Start now for the FUTURE you. And (just for kicks) if you still don’t see yourself that far down the road, check out this AgingBooth app where you can take a picture of yourself to see what you’ll look like in the future (hopefully with fewer wrinkles because you saved and are not financially stressed 🙂
I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!