Skip to main content

Why it’s important to save for retirement

While retirement may seem far off in the distance for some, financial experts say you’re never too young to begin saving.  In fact, the earlier you calculate your retirement needs and start building your nest egg, the easier it will be to create a viable plan for the future.

Many experts advise you begin saving a percentage of your income for retirement as soon as possible, no matter how little the contribution may be, as it’s possible the Social Security benefits millions of people currently depend on may be in jeopardy.

If changes to the program are not made in the next few years, it is believed it won’t be long before Social Security will pay out more than it receives from payroll taxes during the year, which will put the program, as well as your financial future, at risk. You may not be able to depend on Social Security as your sole source of income, advisors say, and expect to live comfortably during your retirement.

This concern, as well as the possibility of a reduction in traditional pension programs and fluctuating investment returns, can seriously affect how you live during your golden years.

Financial advisors estimate you will need between 70 and 90 percent of your pre-retirement income to retire comfortably.  If you currently earn around $70,000 per year, for example, it is estimated you would need to have at least $50,000 a year available each year in retirement for living expenses.   At the end of 2011, it was estimated that a 65-year-old would have needed to have saved more than one million dollars in order to withdraw $50,000 each year, taking inflation in consideration.  Of course, additional calculations would have to be made if you carry credit card debt or will still maintain a mortgage payment during retirement.

Some advisors suggest people take the secure route and diversify their financial portfolio by investing money in different types of savings programs, such as a 401(k) or an Individual Retirement Account (IRA) such as a Traditional or Roth IRA, which include tax benefits.  Setting up an old-fashioned savings account at a local bank or credit union is also an excellent addition. 

Contributing to a savings account, even if it isn’t a large amount of money each month, allows you to take advantage of the benefits of compounding interest.  As the interest accumulates each year, it is added to the principal, giving you even higher returns.

If you tend to spend your cash by the time your next paycheck arrives, try making small payments to your own savings account monthly, as if you were paying a bill; or have a specified amount automatically deposited into your savings each pay period so you don’t spend it too frivolously.

With uncertain returns on investments and the constant increase in living and medical care costs, it’s vital to create your own savings plan, and the earlier you determine your retirement needs and begin saving, the easier it will be to reach your retirement goals.

About the article contributor: America’s Debt Help Organization at is a company that helps people become more knowledgeable about their financial well-being. For All Your Debt Settlement and Debt Consolidation Needs.

Popular posts from this blog

Low interest credit cards - how to make them work for you

Credit cards are borrowing instruments, unlike debit cards where you already have the money. Banks are there to make money too. Just like high street stores, they hope to maximise their profits within the rules. So it’s important to understand the basics and find a credit card that’s right for you – you can compare low APR credit cards here . Now you know the rules, let’s find out how to play the game. The financial services industry charges interest on the money that it lends out. Let us assume you borrow £100 on your credit card and keep it for exactly one year before you pay it back. For the purposes of this article, we will assume your loan attracts 8% interest per year, which is the Annual Percentage Rate, or APR for that particular transaction. Practical example

What are the Consequences of Overspending in Life?

How overspending can ruin your financial life? With today’s expenses and their prices, it can be very hard not to overspend. Still, that isn’t an excuse to stray out of your budget. You know why? It is because overspending can only lead to more problems than you think. Overspending can affect your whole life. With all the possible consequences, it may jump from one problem to another. Unpaid bills All the excessive shopping with your credit card can cause steep bills at the end of the month. If you keep on using your credit but don’t have enough money to pay for it in the end, then you’re surely in for a huge financial disaster. This will turn out to be missed payments, and missed payments will ruin your credit report. Missing out on payments will get your credit report marked for 7 years or more. And you can’t get rid of them by finishing them off. Credit report Overspending can cause a chain reaction of events. Once you get your bills due to overspending, it’s possible for you to mi

How to Make Your Title Loans Safe and Sound

Although title loans are tagged as risky, innumerable folks still use them for fulfilling their different financial obligations. Therefore, such loans are not completely bad because their significant use despite the risk factor says a lot of their pros. This makes it vital to discuss how these loans should be used so that the risk factor can be minimized up to a great extent. For those who are not aware of, the risk of title loans crop up in the form of consequences when you fail to pay back the loan. With such a failure, you are surely going to lose your car as well as decrease your credit score further.

The Top 4 Reasons People Fail at Budgeting

Budgeting isn’t easy, and many people experience difficulty trying to get the most out of this essential financial tool.  While the concept may sound simple, adhering to your budget could be a lot harder than you might think.  To help you experience success, here are the top 4 reasons why people fail at budgeting .

How Equipment Loans can help your Business Thrive

Image via gettyimages Different companies enjoy common benefits from capital equipment. Machinery has direct and indirect effects on your bottom line. A new oven and forklift each make your business more productive. Meanwhile, interest and depreciation expense are tax write offs that indirectly improve business profits. However, your business may not qualify for a general purpose loan to buy much needed equipment. Some obstacles include:

Learn about low doc loans in Australia

Australians who are considering low doc loans or no doc loans need to understand some key facts about the loan before opting for this type of funding. Since the loan does not require much documentation, or in the case of an investment property might not require any documented proof, it is convenient for self-employed individuals. By understanding a few key points, it is easier to determine if the loan is right on a personal level.