We all understand that at some point in our lives, we have to retire. But, not everyone is prepared for the day. Apparently, as per a GAO analysis, around 29% of Americans aged 55 or older do not have any retirement savings or even a traditional pension plan.
“We aren’t surprised that people have not saved a lot for retirement,â€ said GAO director ofÂ education, workforce and income security Charles Jeszeck. “[As] there hasn’t been a significant increase in wages, people have student loans and other debt, and many are continuing to struggle financially.”
Retirement is inevitable, and bills will still need to be paid during this period of peopleâ€™s lives. Without any retirement savings or income, retirees could face deeper debt and financial turmoil. So, why do most Americans still fall short in their retirement savings?
Unrealistic goals & strategies
While some may have their retirement plan ready, not everybody is fully prepared for whatâ€™s about to come when they retire.
Most people in their 20s have started saving for their retirement, yet it seems they lack deeper understanding of their retirement expectations. A study featured by CNBC revealed that Millennials have unrealistic retirement goals, where they believe winning the lottery or being gifted money for retirement are some of the viable retirement strategies. In fact, 65% of them believe that Social Security wonâ€™t help them have a meaningful income when they retire.
No retirement planning
Just because you are giving enough towards your 401 (K) plan and social security does not guarantee that you can live a fruitful life after retirement. It requires retirement planning that must be clear and laid out early on in your life. With proper retirement planning, a retiree is guaranteed more than enough money annually to maintain the upscale lifestyle they dreamed of. Yet, itâ€™s easier said that done. See, even when someone retires with a portfolio worth $1 million, retirees arenâ€™t guaranteed a great retirement â€“ rather said value is considered the bare minimum portfolio value before you retire.
Spending instead of investing
Retirement income must be used similar to your work salary. It comes in monthly and it should cover the rest of your bills. And donâ€™t forget that expenses will continue to be incurred once you retire because if youâ€™re not prepared, it might exceed the monthly income you receive from your retirement plan. Previously, we discussed some ideas how you can increase your income as well as reducing expenses that might help boost your cash flow during your retirement years.
Instead of spending more, why not invest your money in something that brings great returns. There are various investment opportunities that can uplift your financial portfolio â€“ stocks, real estate and business opportunities among others. However make sure to do thorough research on the investments before you let go of your money. â€œThe best defense against simple mistakes is education,â€ as suggested by FXCM. You must learn the elements that affect your investment â€“ currency, exchange rate, economic growth, etc.
No backupÂ plan
But, no matter how much planning you do, there is still a possibility that life will still throw you a curve ball. The only way toÂ go about it is by having a strong backup plan to ensure that unexpected developments will not affect your retirement money. Your retirement savings and income must be flexible to cover you from unexpected events such as health issues, natural disasters, and worst of all, an early death. Some of the options will be to get a life insurance, so itâ€™s important toÂ keep your social security updated, and, of course, maintain a strong investment and asset portfolio to avoid any financial burden when you finally retire.
The earlier you think and start investing in your retirement, the sooner you can achieve the desired financial portfolio value you need before you retire. The best variables to consider are â€˜preparation and education.â€™ Prepare for your retirement, work hard for your future, and free yourself from any stress and burden of financial instability when you reach the golden age.