You Suck At Retirement Saving

If you graduated in the 80’s, you are probably thinking about your retirement savings. Or… if you aren't thinking about it, you should be!

Too many people don’t have enough saved. How can they? They are barely making it day by day. Where would the retirement money come from? If you are in that boat? Read on!

Figuring out how much you need during retirement is a complete mystery. There are so many factors that can go into the calculation, it can be nearly impossible to accurately tell. The general advice, therefore, is to save as much as you can because the more you have saved? The more comfortable retirement will be.

Everyone believes they will cut back their expenses when they enter retirement, and therefore they won’t need as much money. Really? What are you going to do to cut back your expenses? Stop buying oreo’s? Turn the furnace down to freezing in the winter? The truth is, you may be able to downsize (if you are willing to make sacrifices), but retirement will probably cost as much as your pre-retirement years.

Suppose you have a pension that is going to take care of you. Many government pensions will only cover 60% of your income, and experts believe you need 80% in retirement, or more if you plan to retire early.

If you believe Social Security is going to take care of you? Experts recommend assuming there will be no social security when planning your retirement.

This all sounds crazy! You need a business MBA to figure it all out. Or a financial analyst, who will produce charts and graphs that pinpoint exactly how much you suck at retirement planning.

So, let’s make this easy. Let’s set some simple guidelines to help you understand whether your are screwed, or really screwed. We’ll assume you are in your mid-40’s.

If you have been saving 10% of your income per year since age 25, experts believe you should be OK for a nice mediocre retirement. Congratulations! But let’s test the theory. Take your current income and multiply it by 3.3. That’s how much you should have in retirement savings by now. If you plan on retiring early? You might need to have as much as 7 times your current income by now! How are you doing?

Suppose you are like most of us and fall a little short in your retirement savings. Let’s examine the other extreme: you are 45 and have little or no retirement savings. Some experts recommend you immediately start putting 27 percent of your paycheck into retirement savings. 

Most readers just fell out of their chair.

If you are in the minority of Americans who have proper retirement savings – congrats! If you are like the rest of us? Get up off the floor and get back into your chair.

Now is the time to take retirement saving seriously! OK, twenty years ago was the time to take it seriously, but, if you haven’t, then now is the time! If you don’t make adjustments you could be doomed to living in poverty throughout retirement.

Retirement savings is massive and overwhelming. Where do you being? Begin by living under your means. Examine your budget and reasonably cut anything that isn't necessary.

Learn the difference between a “want” and a “need”.  I want a beer, but I need to pay my doctor bill. I want a new truck, but I just need something that’ll get me to work and back. I want a vacation in the Bahamas, but all I need is to get away for a weekend. I want new shoes, but all I need to do is to clean up my old ones.

If you are a parent who is helping their children (saving for college, or, helping adult children)? The best help you can give your children is to not be a burden to them when you retire. It is OK to help your children, but not at the sacrifice of your retirement savings.

Once you have examined your spending, you’ll find savings. Take those savings and put them into a 401K, IRA, or some other investment vehicle.

Next, find a financial adviser who will give you a free analysis. They’ll need to know all your bills, insurances, house value, and a ton of information.  In exchange, they’ll tell you where you sit and what you need to do. Just be careful – most financial advisers are motivated to sell you something. The best part of talking to a financial adviser? You'll be listening to an expert instead of a goober writing a blog.

Whatever you decide to do? Don’t ignore this problem! Take care of it today!