Retirement Savings: Things to Know and How to Start
I recently began researching retirement savings and the overarching theme is that people are not saving as much as they should/could to be able to support themselves into retirement. It’s understandable because many folks are just trying to get by. In fact 50% of Americans live paycheck to paycheck. In such and environment its not surprising that 30% of adults don’t even have $500 set aside for an emergency. And one last stat, according to information reported on time.com by 40 years old a full 80% of people are behind in their retirement savings.
Okay the situation seems pretty bleak and if you feel that you could be included in the stats above here are a couple things you should know:
- You are not alone! A full 80% find themselves behind in savings by 40 years old… There must be something fundamentally wrong with the system.
- It is not your fault! In the late 70’s when many retirement plans began changing from pension plans to “defined contribution” plans (401k and 403B) they took the burden of investing off the company and placed it squarely on the shoulders of the individual… with no training or coaching!
- It’s never too late to start!
It really isn’t too late to start saving for retirement and if you are like me you’re probably thinking I’m terrible at saving.. believe me, I was too. Anytime I had a few hundred in my savings account it would suddenly have to be used on something I needed… or most likely, wanted. Whats the cure to this issue? I firmly believe the trick is saving in a way that follows the adage, “out of sight, out of mind”. Doing it this way means while you’re out living life and thinking of other things behind the scenes your savings account keeps growing!
The best way I know how to do this is take advantage of your company’s 401K or 403B retirement savings plan. The key to this plan is that it allows you to put money away before paying taxes so if you wanted to put in 100 dollars a paycheck, your paycheck would only be reduced by 70 or 80 dollars! Instead of paying Uncle Sam you get to put that money away for your future! Pretty outstanding am I right? But wait there’s more! Many companies offer a match up to a certain amount that means you could also get a few bucks from them! Seriously you could reduce your paycheck by 80 bucks and end up depositing 150 or more into your retirement account!
Okay that is pretty outstanding but really the absolute best part is once you set it up the money is automatically moved from your paycheck to the retirement account before you receive each paycheck! So you don’t even see the money being deposited… out of site out of mind. You can focus on living life and paying bills and one day you will look at that account it could be $10,000, $100,000, or more!
If you want information about how to setup your 401K or 403B retirement account email me at MichaelPaul@MurphyOnMoney.com and I will send you the 5 steps!
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