Saving for retirement is more important than ever before. And not to mention we Americans are not saving enough we likely will need for retirement. It’s estimated that 1 in 3 Americans have less than $5,000 dollars saved for retirement! But nobody tells you how much money do you need to retire. How can they, retirement planning is hard!
How much money do you need to retire? Are you taking the required steps and plans for retirement? At what age should I retire?
These questions make retirement planning so difficult. But if you what to succeed at saving for your retirement, you need to take the first steps. These are:
The Main Reasons Americans FAIL at Retirement Planning
#1. You Aren’t Saving Any Money
This is problem #1 on Galizer. And this sadly goes for all of Americans. You most likely are not saving enough money! Some of you are not saving any money at all.
Don’t worry, you’re not alone. Millions of Americans are just like you. But that doesn’t mean that you should follow suit.
Because saving money is important, you should saving as much as you can. Start with a simple budget to help change your habits.
#2 You aren’t investing Any Money
Think about this: Businesses rarely hold on to a lot of money. Most companies put their money into other investments or assets so it will grow.
In finance, there are mathematical formulas called time values. Time value basically means the longer you hold on to money, the less it’s worth. The same $1,000 today is technically worth less than the same $1,000 tomorrow. This is mainly because of inflation.
So if you put $100,000 in the bank for 20 years, that $100,000 will be worth much less than it did 20 years ago.
If you are saving money for retirement, go ahead an open a IRA. Preferably a ROTH IRA so you do not have to pay taxes when you want to take out your money. Also do some research on some mutual funds to put your money in!
But the best thing someone who is serious about saving money and retirement planning is to talk to a financial expert.
#3 You Started Saving For Retirement Too Late
The worst mistake anyone can do when saving for retirement is to wait until it’s too late. Waiting too late to save money is missing the whole point. The point is to be prepared to retire when you want to retire. Not when you have to retire. Or when you can’t retire
Worst comes to worst, you have money saved for emergencies.
The whole point of saving is so you can be prepared for that moment. But you never know when you’re exactly going to need that money.
Just know It’s never too late to start saving for your retirement.
#4 You Don’t Know How Much You Need to Retire
This is a secret that few people will tell you. You ready?
Nobody really knows how much money exactly they need to retire. Even people who feel confident almost always some some sense of doubt. Like, “What if I had kept working for just one year longer?” “What if we had downsized our home, and invested the rest of the money into stocks?” Except for maybe the extremely wealthy, but there are even a lot of extreme wealthy people that still worry about money!
So if you have some sort of anxiety towards how much you need, don’t worry about that! That is normal.
What advice does Galizer recommend?
Literally save as much money as you possibly can. There will be extremely low discourse if people were to do this and only take out money or spend savings whenever absolutely needed.
#5 You Aren’t Saving Enough Money
Lets say you are saving money for retirement. Your spouse receives a pension from his/her old job, you have thousands of dividend paying stocks, and $50,000 in the bank. It may sound impressive, but that’s not enough money and capital to retire. And don’t even think that social security is enough to retire and live off of!
You will most likely need more money to retire than that. But different retirees will do different things with there savings. Some will choose to live a more extravagant lifestyle, travel the world, and live abroad somewhere. While others may play it extremely conservative. Nevertheless, everybody needs a good amount of saving to reach their personal retirement goals.
For reference, check out this handy-dandy retirement calculator to get a good estimate of how much money you need to be saving. Or are you already failing at retirement planing?