145,830,932 of you are concerned about your retirement.
59% of individuals over the age of 18 are concerned they won’t have enough money for retirement according to an April 2014 Gallup Poll. Are you one of the 145,830,932 individuals? How do you know if you’ll have enough money for retirement? What should you do if you’re in this group? Are you concerned? What can be done today to improve your financial foundation? Here are some ideas for those 145 million individuals concerned about not having enough money in retirement.
The first suggestion is to get a financial plan. It will help define all things financial including your retirement. The planning process will focus your thoughts on what’s important to you and your family. It will identify the strengths and weakness of your current financial situation. It will give you suggestions for a successful retirement.
It’s paramount to save more towards retirement. Every little bit of savings you can muster will benefit your retirement. If you’re currently saving $500 per month, can you bump it to $600? For example, saving $500 month at 5% will grow to $205,516 in 20 years. A bump to $600 will give you $246,620.
What if you’re not in a position to save more? In a situation like this, I’d encourage you to review your investment allocation and tilt your retirement account towards stocks. Over time, an account that has an aggressive profile will outperform one that’s conservative. A more aggressive account may cause you heartache in the short term but will benefit you in the long run. Once you’re in a position to save more, you can reduce your exposure to stocks. Without the extra $100 per month from the previous example, you’d have to earn 6.5% on your money to get the same results.
The opposite of saving more is spending less. I get a kick out of commercials telling you, “The more you buy, the more you save.” Instead of buying five tubs of peanut butter, buy six and “save” 10% on your total order. The ad would better serve you if it said, “The less you buy, the more you save.” Try to focus your spending on items you need mixed in with an occasional want. How can you improve your spending?
A budget will be beneficial. A look back at your spending habits will identify the good, bad and ugly of where your money has gone. This rear view review will put you in a better position to see where your money has gone and where it should be going. How far back do you have to go before you start to see a trend? Four to six months will give you a picture of where and how you’ve spent your money. After your review, is there a category or two that can be reduced or eliminated? If so, you can transfer these extra dollars into your monthly savings program. During my annual review of my family’s spending habits I always look to see who spent the most money – me at Home Depot or my wife at Target.
The last suggestion is to work longer. Really? Who wants to work longer? I don’t. If you don’t want to work longer, then I’d focus on saving more and spending less.
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. Mark Twain.
… and the borrower is slave to the lender. Proverbs 22:7
Bill Parrott is the President and CEO of Parrott Wealth Management, LLC. www.parrottwealth.com