This week marks National Retirement Planning week. And as sponsors of the observance point out, one of the major issues facing those looking to retire are a lack of personal savings.
The Employment Benefit Retirement Institute’s 2017 Retirement Confidence Survey shows that, of the respondents in the survey, many had no retirement plans. This survey also shows that workers who do have a retirement plan are more than 10 times likely to be actively saving and preparing for retirement than those who don’t. Saving is an important pillar in planning for retirement.
The Key to Saving: Have less going out than you have coming in
That may sound simplistic, but it is hard to do in practice in a world where we are badgered every day to buy new gadgets, widgets, and fast food specials. And we all know that most of those things we can easily do without (especially the fast food!).
One of the key ways a household or individual can start saving is to have a personal budget. Having a budget can help identify what money can be made available to save for retirement, and it can also help prepare someone for living within the means of a retirement plan.
It’s called paying yourself first. After all, the person who is going to reap the benefit of you saving is … guess what … YOU! And there is more to it, because with a little time on your side your savings have potential to grow, compound, expand. That’s like getting your money for nothin’
Key factors to creating a successful personal budget:
1: Identify your available income:
It is important to know the amount of money coming into your household. Your gross income is very different from your income after housing, food, health insurance deductions, taxes, 401(k) contributions and other factors. The same goes for any other income streams. The goal is to find out what your net income is so you can plan accordingly. Try our personal budget calculator to help you figure out your income and expenses. It’s in a PDF fgormat, so feel free to download it and use it as needed or to send it to family or friends.
Try our personal budget calculator to help you figure out your income and expenses. It’s in a PDF format, so feel free to download it and use it as needed or to send it to family or friends.
2: Make a plan:
Determine your budget goals. If you are saving, and specifically saving for retirement (and EVERYONE ought to be), identify what your expenses are and set goals for what you want to save. A good rule-of-thumb if you are under fifty is 10% of your gross income. For people over 50, and who have made most of life’s major purchases, the goal should be closer to 15%.
Identify how much you want or need to save while accounting for unforeseen issues and making sure your needs are met for the future. This is an area where working with a trusted financial adviser can be important. Professional guidance can enable you to fully see what your options are and what avenues are available to reach your savings goal.
3: Stick to your plan:
Once you have made a plan, stick to it! This sound so simple, but if you aren’t dedicated and disciplined with your budget, it can’t possibly fulfill its purpose. Review it as needed. Make adjustments as warranted, but always keep in mind your ultimate goal and make sure you are taking actions and engaging in behavior that makes that outcome possible. If, for some unforeseen situation, you don’t meet your saving goal for a month, unflinchingly commit to getting back on track the next month – and do it.
Making a budget is an important part of a savings plan, regardless of how close you are to retirement. In fact, this advice is probably more important to a 20-year old than it is to a 60-year old. However, if you are making a personal budget expressly for the purpose of saving money and preparing for retirement, then don’t hesitate to get experienced guidance. Remember, people who do have a retirement plan are more than 10 times likely to be actively saving and preparing for retirement than those who don’t.
At America’s Retirement Store we offer a complimentary Discovery Session. This is a comfortable, one-on-one session where we can discuss your goals, your resources, and your dreams. We can take a deep dive exploring your assets, income streams and other factors to see how they work together and how they are likely to impact your retirement plan. You have many options available to you, you simply need to know what they are. Sign up for your Discovery Session online or call Natalie at 303-694-1600 to set up a meeting convenient for you.