Does Your Employer 401k Need Help?
Most Americans rely on 401k plans for the bulk of their retirement. A serious problem with 401K plans is the investor's reliance on employer matching for the plan. This may cause an employee to rely too much on the employer and not contribute enough to savings. But, if you have not taken a serious look at retirement planning yet, nothing will give you a wake up call like using one of the many retirement calculators available on the internet. Retirement planning, which is essential for every adult, certainly is a difficult task and shouldn't be taken lightly.
Because there are so many variables in preparing a financial plan for retirement, the process can be difficult, at best, even when you are using a professional advisor. Some of these variables are: the age at which you retire, the age at which you start your savings, the amount you save for retirement, how much your retirement savings earn over the years and into retirement, how much debt you have, if any, at the age you plan to retire, and the quality of your health entering retirement and how long you live after retirement.
You also need a way to account for fiscal irresponsibility on the part of Government (i.e. inflation) and what that will do to your retirement savings. On the internet there are dozens of retirement calculators available, sponsored by retirement organizations, investment companies and other businesses in the money management business that can help you do this. What most of the calculators will show you, is that for most people, even relying on Social Security, you will need a lot of retirement savings to maintain a near pre - retirement standard of living.
If the economy is able to grow enough to outpace inflation, your investments must be able to keep up. Even still, with inflation running 3%-5%, your investments are losing value and struggling to keep up.
Years ago our parents and grandparents, grew up in a time when a $50 a week wage was respectable income, and even during mid life that respectable income had quadrupled to $200 a week. But now, more than 50 years later, it would be foolish to expect to be able to live off $200 a week, and the $50 a week income is minor in today's economy.
If you make $500 or $1,000 a week, you can expect a similar phenomenon when you retire. A retirement calculator will show that you should have a retirement nest egg close to $1 million dollars to retire comfortably in 20 or 30 years.
One of the calculators tested showed shocking results: an adult starting with $100,000 adding $4,000 year to that would retire with nearly $900,000 but would end up broke by the time they were 85 years old!
Part of managing your income is setting aside savings and investing a part of it (note, not ALL of it) for your future. Even though it's difficult to forecast the future, it is necessary due to the nature of human beings and the requirement of long-range planning. There is a wealth of assistance available on the internet to get you started, and professional advisors ready to help when needed.
Because there are so many variables in preparing a financial plan for retirement, the process can be difficult, at best, even when you are using a professional advisor. Some of these variables are: the age at which you retire, the age at which you start your savings, the amount you save for retirement, how much your retirement savings earn over the years and into retirement, how much debt you have, if any, at the age you plan to retire, and the quality of your health entering retirement and how long you live after retirement.
You also need a way to account for fiscal irresponsibility on the part of Government (i.e. inflation) and what that will do to your retirement savings. On the internet there are dozens of retirement calculators available, sponsored by retirement organizations, investment companies and other businesses in the money management business that can help you do this. What most of the calculators will show you, is that for most people, even relying on Social Security, you will need a lot of retirement savings to maintain a near pre - retirement standard of living.
If the economy is able to grow enough to outpace inflation, your investments must be able to keep up. Even still, with inflation running 3%-5%, your investments are losing value and struggling to keep up.
Years ago our parents and grandparents, grew up in a time when a $50 a week wage was respectable income, and even during mid life that respectable income had quadrupled to $200 a week. But now, more than 50 years later, it would be foolish to expect to be able to live off $200 a week, and the $50 a week income is minor in today's economy.
If you make $500 or $1,000 a week, you can expect a similar phenomenon when you retire. A retirement calculator will show that you should have a retirement nest egg close to $1 million dollars to retire comfortably in 20 or 30 years.
One of the calculators tested showed shocking results: an adult starting with $100,000 adding $4,000 year to that would retire with nearly $900,000 but would end up broke by the time they were 85 years old!
Part of managing your income is setting aside savings and investing a part of it (note, not ALL of it) for your future. Even though it's difficult to forecast the future, it is necessary due to the nature of human beings and the requirement of long-range planning. There is a wealth of assistance available on the internet to get you started, and professional advisors ready to help when needed.
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More Info: Only so much information can be covered in one article. If you want more information about any aspect of personal financial planning, please visit David's website.
posted by Credit Counseling at
11:01 PM
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