Some retirees are in real danger of running out of money. Many in middle age with little in the way of retirement provisions in equally real danger of simply having insufficient to live on once their last pay check has come and gone.
Social Security benefits are totally inadequate for supporting anyone in retirement. The figures in the USA suggest that only a small minority is saving the money it should be saving each month with a view to providing for a comfortable retirement.
A recent survey from the Employee Benefit Research Institute suggests that some people, aware of their lack of savings, are saying they intend to save more in the future. Unless they are in their 20s and 30s they are running out of time. Others intend to work longer before retirement but there is no guarantee they will get that opportunity, certainly with existing employers.
Time Is an Enemy
The problem revolves around the number of years that Americans save towards retirement. Compound interest provides significant growth on even $50 a month set aside for 30 or 40 years. If it is 10 or 15 years then the returns are substantially lower. The amount needed to be put aside over 10 or 15 years is many times more than that $50 to achieve a similar result.
If you find yourself amongst those that have insufficient set aside, what can you do? Well you need a budget and financial strategy immediately. The level of success you will be able to achieve certainly depends upon your age. What is certain is that doing nothing at all in not an option unless you accept you are likely to live at poverty level in retirement. Even life’s essentials may be beyond you are there will certainly be no treats even on special days like birthdays and anniversaries.
There is every reason to worry even if retirement is 25 years away because if you have no retirement strategy in place you will already have behavioral traits and bad habits that can be difficult to break. You must break them now because if you don’t you will face an uncertain future. You do not need to be among the low paid to face this problem. You might have a healthy income but if you are spending all you earn each month without putting anything aside you clearly have not thought of the future consequences. You might like spending, perhaps cannot even resist it, but you need to ask yourself whether any of your spend has lasting value? Unless it is property or perhaps jewelry and fine arts it won’t have.
Make a Budget and Follow It
A comprehensive budget is the first step towards better financial management and the chance to put something aside each month towards retirement. If you have no current surplus each month then you have to make economies. If you are always seeking the latest fashions or the newest piece of modern technology and have nothing left at the end of the month you are living beyond your means. The crash into the reality of retirement will be even harder than that faced by those who struggle to pay their normal bills.
One of the major problems in today’s society is the credit card. There are far too many people with expensive balances that are frankly a waste of money; high interest is applied each month. As part of the budgetary exercise you should pay off your credit card balance using a just right personal loan at a much lower rate of interest. You must resolve at the same time not to build up any balances in the future.
There will be other possible economies to make. Comparative websites will give you at least an indication as to whether you are paying too much for your utilities, your telephone network of your insurance. If you can make any savings here that money can be used towards the future not spent as before.
There is a genuine danger of the majority of a generation running out of money in retirement. Those who do not address the potential problem by starting a budget and sticking with it will have little chance to enjoy themselves in their later years.
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