As the generation of American Baby Boomers head into retirement age, many are astounded by just how much they didn’t save over the years. With the continuous high cost of living increases and the downfall of many stocks, the baby boomer generation is finding it really hard to retire.
Why The Failure?
For many baby boomers, the reasoning behind the failure to adequately save for retirement is the same. Most baby boomers started too late – well into their thirties in some cases – instead of capitalizing on the funds earned in their late teens/early 20’s. As a result, many people over the age of 60 have saved barely a quarter of what they really need to retire on.
Today’s personal finance experts are urging the working youth to start contemplating their retirement savings plans as soon as they start earning an income. Many youth still struggle to grasp the concept of the importance of savings but many are getting on board with starting their employee-sponsored 401k and other retirement savings vehicles. For baby boomers, 401k accounts did not start appearing until the early 1980’s which means they had less time to save than young workers today. Back then, the 401k account was meant to be a supplemental account for retirement whereas today they are a full vehicle for retirement savings funds.
Another possible reason for the lag in savings funds is the fact that many American families find it hard to save. Their income is often already extended just to live month to month, from one paycheck to the next. They have been neglecting their retirement accounts in lieu of keeping the lights on and food on the table. With the additional loss of retirement funds due to the recession and the high rate of unemployment, workers of every age have been hit hard. Those so close to retirement are really feeling it the most.
What Can You Do to Recover?
As the saying goes, it’s never too late to start saving. The main resource most people have for making it to retirement is to keep working as long as you can, even if it is only part time work. If you have managed to keep your job long-term, it will certainly benefit you to stick with it while you put serious focus on your savings plan for the very near future. You will also get to contribute to your 401k for a longer period of time and likely have the ‘extra’ income necessary to continue making deposits to your IRA or other savings accounts designated for retirement. There are provisions within the government that allow people over 50 years of age to contribute additional funds into their retirement funds as a method of catching up on savings. If you are not able to contribute the maximum amount of funds to your 401k account, make sure you are at least depositing enough to get the company match. At this point in your life, it would be detrimental to refuse free money in retirement.
The next thing you can do to help finance retirement is to delay taking your Social Security payments until you have reached 70 years of age. Even though an individual can claim full benefits at the age of 66, taking benefits too early also means you lose some of the benefits. At 70-plus years, you would be entitled to full Social Security benefits.
Committing to Your Plan
You likely were not caught completely off-guard by the fact you are lacking retirement funds but the realization can still be difficult to live with. The primary concern you should have right now, as you head toward retirement age, is to not give up all together. You need to instead be aggressive about your savings plan for retirement and educate yourself on all available options.
If the task and thought of prepping for retirement overwhelms you completely, you might be well-served to consult with a financial planning effort that can help you put your retirement goals and needs at the forefront of your financial life. Even if you only use the advice and resources initially, it can be a great way to motivate yourself into taking action on your own and help you see the light at the end of the tunnel.
Ed O’Brien is a seasoned writer on issues concerning repairing credit having a strong background in business and personal finance. His blog, Credit Repair, offers free advice to those seeking ways to improve their credit scores.
No comments:
Post a Comment