Retirement Savings - Why You Shouldn't Wait to Save

Often times, I sit in front of clients over the age of 40 who have less than $30k in retirement savings.  Do you think that's a problem?  I hope you answered 'Yes' to that question.  There are a few issues with that.  First, people underestimate how long it takes to save for retirement.  Second, people don't really know how much they need to save to reach their retirement goals.  Last, most people simply wait too long.....procrastination.

Allow me to share what I've discovered when reviewing my client's cases.  First, they're not making enough money in order to save more.  Second, they're not saving enough even if they're making great income.  Last, they started saving later on in life which pushed them back on earning compound interest over time.

If you have never sat down with someone to discuss your retirement goals, I recommend you do so early on.  Five years before retirement is too late.  A person saving $400/month at age 18 up to age 65 ($1.2M in retirement if saved in a vehicle with an average ROR of 6%, no losses, and no matching) vs $1200/month later at age 35 up to age 65 ($1.2M in retirement if saved in a vehicle with an average ROR of 6%, no losses, and no matching).  Assuming you want to be in control of your financial future, which sounds better?  BTW, if you're saving in a tax deferred plan, guess what you haven't paid? TAXES, so your $1.2M isn't all yours. You must also factor in the lifestyle you want to have in retirement. If you divide $1.2M by 18 years which is the average retirement lifespan, that'll give you approximately $66,666/year before taxes. Here's the problem. Due to inflation, our cost of living doubles every 20 years. This means that even starting young, at age 18 and saving $400/month without increasing contributions, you can still run out of money in retirement simply because you didn't account for inflation or taxes. Even when your income is secure for a lifetime, will it be enough to sustain your lifestyle including health care costs until you say peace out to the world?

A conversation like this doesn't cost anything but time. If you had time to watch the homerun derby or the all-star game tonight, let's set a time to review your current financial situation. Let's find a solution before you blink and you're 5 years away from retirement.

If you're one who is serious about learning how to better understand how your money is or isn't working for you or you simply want to discuss how to start, contact me via e-mail to schedule an appointment.

I don't charge but I gladly take chocolate.

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