What Happens When You Do Not Have Enough Saved for Retirement
Everyone is aging, and this is the one process that cannot be changed or reversed. Change is inevitable, coming up more rapidly than we would like it to be. Even if you are young and you think retirement is a million miles away, you should start thinking about it as soon as possible. More and more people are regretting that they failed to start saving earlier impacting their quality of life at retirement. It gets worse when we start postponing the inevitable by neglecting to spend enough time stressing about how important it is to consider our life after work. The education system does not provide basic financial know-how, and people are struggling when it comes down to their financial planning as a result. Instead of spending quality time on getting themselves financially educated, they have spent money on less important, emotional, and unnecessary purchases, car loans, house loans, and items well stuffed in the huge garage. Here is some information that might happen to you if you have not sufficiently prepared for retirement.
What Happens When You Age?
Remember 2000 and 2008? Alternatively, all the crises before that? A crisis is what people call "unexpected" situations that damage the economy, causing regular citizens to lose significant amounts of their savings. Those kinds of events have destroyed well-built businesses, employees get fired, and families get displaced. If a person is young enough, they will have a better chance to recover, but if you are in your 50s or even 60s, when one of these events takes place (and there will almost certainly be a future crisis), then the average American's retirement outlook would go from bad to worse.
The 401(k) was created many years ago, and it has become a primary component of many people’s ‘American Dream’ – work hard, earn money and save for a rainy day – the thought is that your 401(k) will take care of your retirement income needs. The sad truth is that 401(k)’s have been neglected. Studies show that very few are consistently contributing to their 401(k). However, with Social Security benefits being impacted by reduced Cost of Living increases, and the lack of available pension plans.
What is Retirement?
Retirement is a goal that many people long for and will work their entire lives dreaming about. Moreover, in theory, it sounds like a magical time – you no longer have to work, you get enough money, you can travel the country (and the world), your kids are all grown up, taking care of their kids, so you have no real responsibilities. However, that comes only if you have taken good care of your finances and you have planned for better (or worse) days. If you are forced to work into your 70’s as many Americans do, just to maintain a certain quality of life, then you may have done something wrong.
What To Do?
We have established that financial planning for retirement is incredibly important but what should we do to avoid a sad retirement? Well, the simple answer is financial education, but it is more complex than it sounds. Reading books, going to courses, getting advice – all healthy but it would mean nothing if you do not implement everything that you learn into your life. Different people will give you different advice, so you have to experiment. Try what works for you and what does not. Some people love saving money under the pillow, others love having a secure bank account and some like to invest for the future. You will get different information from the sources that you read from but do not get discouraged – write down what you were thought and try it – only this way you will see if it works for you or not.
Create habits – some are more important and obvious than others. The first and most important rule of financial planning is to set a savings goal and stick to it. Saving a portion of your salary can become a habit, and the compounding of interest can have a very significant impact on your retirement life when you start saving early.
Start writing down all of your expenses (and your income). Every few months you can go through them and check if you have made emotional purchases that you do not need and this way you can get closer to saving more money – money that you will need when retirement comes knocking on your door.
As always, connect with a professional financial professional for further strategies and options.
About June Kirby
June Kirby has almost two decades of experience serving as a federal employee retirement trainer, strategy specialist, and advocate. Based on her extensive knowledge, she offers consultation on a host of federal retirement benefits and TSP maximization strategies. Ms. Kirby tirelessly travels the country to make herself available to hundreds of deserving, yet under-served federal and postal employees, federal agencies, unions, and organizations.
Simply Secure Financial and June Kirby are not affiliated with or endorsed by the U.S. Government, any governmental agency, or any federal benefits programs discussed herein. Your personal specialist at Simply Secure Financial may offer insurance services, and as such, is a licensed insurance professional with training and experience in federal employee benefits.