Retirement confidence?

I was reading an interesting article on NAPA's website about the surge in retirement confidence. The 34th Annual Retirement Confidence Survey (conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research) found, among other things, that 68% of surveyed workers and 74% of surveyed retirees were very or somewhat confident that they would have enough money to live on.

Certainly one can quibble whether those surveyed had conducted an in-depth review of their finances and accurately predicted all the financial "fun" life can throw at them. And one can also scratch their head over some of the math. For example, 2 in 5 who retired early say they did so because they could afford to. Yet nearly 7 in 10 retirees indicate the reason was out of their control. Is your head spinning yet?

Leaving that aside, here is what I say to all of my 401k participants. First, give as much as you can with each paycheck. Most 401k plans allow contributions to be adjusted with some regularity throughout the year (ie, monthly). I prefer participants work out a budget and then save aggressively. If they are too aggressive in the savings amount, they can lower it. But I would rather they start aggressive and lower it than start with a comfortable/ low amount and never raise it.

Second, start as early as possible. The earlier you start, the better chance you give yourself to build up a possible nest egg. I remember one of my CEOs saying he wished he could go back in time and tell his 25-year-old self to start saving. Time travel is seen in science fiction or in a good Harry Potter story. Sadly, it is not possible in reality. Save as much as you can as early as you can. You can thank me when you get to 65 or 67 or 70 or whenever you retire!

Third, look at and research all of the retirement plan's investment options. Next, choose the ones best suited to your financial goals, time horizon, values, and level of financial risk. Review these investments regularly. Be prepared to change them if a life event (ie, inheritance) happens. I would rather my participants stay on top of their investments instead of forgetting about them.

There is no guaranteed formula for retiring with the right amount of money. The right amount is determined by when you will retire, where you will live in retirement, what your expenses will be, and what longevity looks like in your family. But the above three points can be useful in making a dignified retirement possible. These three points can possibly boost your retirement confidence.