It’s the time most American workers dream of – retirement! Spending their days traveling the world, taking up hobbies they haven’t had time for or just living a life of rest and relaxation.
Unfortunately, recent reports reveal that today’s workforce may be woefully unprepared – at least financially – for retirement. According to the 2018 Retirement Confidence Survey by the Employee Benefit Research Institute, a substantial percentage of workers say they have no or very little money in savings and investments. Among respondents, 47 percent report that the total value of their household’s savings and investments, excluding the value of their primary home and any pension plans, is less than $25,000. This includes 24 percent who say they have less than $1,000 in savings.
The key to ensuring preparedness is not only in planning, but actively avoiding these common retirement savings speedbumps when it comes to growing the retirement nest egg:
- Not saving enough. Deciding how much to save is very subjective. It depends on taking an honest look at the lifestyle you intend on living following a career, and then figuring out how much you will need to make it a reality.
- Not putting savings in the best places. Diversification is important as is investing your assets with tax efficiency in mind. A financial planner can help you figure out how best to appropriate assets into tax now, tax later, and tax never buckets, while ensuring you have enough flexibility to address both short- and long-term financial opportunities and burdens that may arise.
- Not following an optimal strategy. No two retirees are the same, so it stands to reason no two retirement savings strategies should be the same. A lot depends on what kind of worker you are – employed, self-employed, business owner or already financially independent. Each brings with it a unique set of circumstances that should be carefully considered.
- Not taking responsibility for your own future. Taking the first step and seriously looking at your current and future financial situation is key. It’s never too late to start saving!
- Not seeking help from a financial coach. The world of dollars and cents is complex. Whether you’re in an entry-level position or seeing retirement up ahead, take time to sit down with a financial coach to get an accurate picture of your current financial situation, set realistic goals for retirement and then put a roadmap in place that will lead you toward those goals.