How to be retirement ready
by. Cyndi Cohen
According to a 2013 Gallup survey, “37% of non-retired Americans say they expect to retire after age 65, 26% at age 65, and 26% before age 65. The most notable change over time is the increase in those expecting to work past age 65 — the 37% this year is up from 22% a decade ago and 14% in 1995. Meanwhile, the percentage of non-retirees who say they expect to retire before age 65 has declined to 26% from 49% in 1995.”
These statistics are a bit worrisome for those in the retirement planning stage. However, you can take solace knowing that you still have time to change your habits. While many of us would rather spend our extra money on things that provide instant gratification – cars, clothing, vacations, you name it – making the decision to save some, or all of that extra cash, is a smart one. With the source of retirement income shifting from 80% Social Security, traditional defined pension benefit plans, and immediate annuities to just 30%, leaving over 60% to have to come from defined contribution plans and other savings outside their retirement plan along with post-retirement employment. All of this means that good habits in terms of saving for retirement are not really an option, but rather a necessity if you hope to live a secure and comfortable life, at and after, retirement age.
By starting with some small, simple changes and getting more intense as you feel more comfortable, you will eventually make saving for retirement a regular practice.
5 Tips for Adopting Good Retirement Habits Now
- Start small and earlyIf you are contributing nothing to your 401k plan, start out small with the minimum percentage. While it may not seem like much, it is so much better than nothing! Just 1% of your income can add up to a hefty chunk of change over the course of 30 years. In fact, a 1% contribution based on a 50K annual income is around just $41 per month from your paycheck (not very much), but will amount to over $66,000 in 30 years’ time. And, the sooner, the better. The earlier you can start contributing to your plan, the more time your money will have to compound and the greater reward you’ll reap in the end.