Not Saving For Retirement? Here’s Why You Should Start Now
There are many reasons why you haven’t starting thinking about your retirement. You might think that because it’s so far away you have plenty of time to put it off for another few years. According to psychologist Daniel Goldstein, it can be difficult for many people to imagine themselves growing old. In our heads, we all realize we will grow old, but the concept doesn’t seem real to us. We often don’t even want to think about it -- let alone plan for it.
The reality is that we will all grow old and eventually, the time will come for us to retire. The most important thing you can do to prepare for retirement is to envision what you want in retirement, and start putting your ducks in a row now to ensure that you can live the life you dreamed, and most importantly, planned for.
Gen X and Millennials Fall Behind
Gen Xers have fallen behind on their retirement savings, but this is largely due to the Great Recession that cost them an average of 45 percent of their net wealth. Another factor to consider is that Gen Xers are in the midst of sending their children to college and could also be supporting their aging parents, financially or otherwise. The median amount of retirement savings reported by Gen Xers is $69,000, but the median amount of savings that Gen Xers reported they would actually need is $500,000. While there’s certainly a gap that needs to be closed, there’s plenty of time for Gen X to catch up. Studies show that having a written strategy with a financial advisor for contributing to retirement increases the chances for success.
From a generational standpoint, millennials are the least prepared for retirement. A little less than half of millennials -- 42 percent -- have nothing saved for retirement. Millennials are so focused on repaying student loan debt and financing immediate, present-day needs like a car or a home, but this mentality puts them at a disadvantage. What twenty-somethings may not realize is the difference that interest makes over time. When someone starts saving for retirement in their twenties, by the time they get to retirement age, that number is going to be huge compared to if they waited until they were in their thirties.
What’s Next?
The first step in planning for retirement is to do a financial wellness checkup. We’ve created a simple, two-minute quiz that asks you five quick questions regarding your financial situation. You’ll know in an instant whether or not you are on track for retirement. If you take the quiz and discover that you’re not where you want or need to be, click on “Get Started” to speak with one of our advisors to help you get back on track and create a game plan for your retirement.
In addition to evaluating your financial well being, you can also start making changes to your mindset. When you begin to save money, consider it an investment in your future self. Resolve to pay yourself first -- meaning you should direct funds toward retirement before any immediate needs or wants. Your future should come first.