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Middle Class: Are You Ready For Retirement?

Posted on August 14, 2014

(This is the transcript of a podcast recorded by Robin Tull. Click here to listen.)

preparing-for-retirementThe American middle class is struggling. You probably already know this…in fact, you may be even living it. In a 2013 Wells Fargo Bank study, they found that Americans between the ages of 25 – 75 with household incomes between $25,000 to $99,000 are barely paying their bills, let alone saving for retirement.

We used to have such a clear picture of retirement…at age 65, the office staff throws a party, you’re given a gold watch, and then you sit back and enjoy – well, you sit back and enjoy life. This is often referred to as our Golden Years. This is the time you get to do whatever you want to do, whenever you want to do it. It was the reward for a life of hard work. Sadly, that picture no longer exists. 48% of those polled do not believe they’ll have enough money to live the lifestyle they want to in retirement, and another 37% do not believe they’ll be able to retire at all! Which brings up another question…will there even be jobs for people well into their golden years? Hmm…that’s another topic for another podcast.

I understand this subject may sound depressing, but apparently pessimism and uncertainty are rampant among the middle class. The 2008 financial crisis and resulting recession caused anger and frustration, and rightly so…more than 40% responded that the recession delayed their plans to retire or resulted in many having to simply start over. But even though most investors recognize that stock-related investments give higher than expected annual returns, people still have a fear of losing their nest egg in the market…and that fear is stronger than the fear of NOT being able to retire at all. People are so afraid of the equity market that they feel they can do better gambling in Las Vegas than investing in stocks. Personally, I would not want to test that theory.

Not surprisingly, everyone polled wished they started earlier. But what was surprising was that, at this point, the older set had not saved much more than the younger. Nearly half of those between the ages of 25 – 75 had saved less than $25,000 for retirement! And it’s not because of an income disparity…those who make more money have not saved much more than those who make less. So why is this?

It may simply be that in addition to the pessimism, people polled were not interested in learning more about investing. In my experience, fear plus lack of knowledge does NOT equal success – in anything!

Another interesting statistic from the study…42% of those polled believe the myth that it is not possible for them to pay their bills AND still save for retirement. Although this may be true for some people, when it comes to saving, you need to make sure you take advantage of every little opportunity out there. Even tiny increments add up. As the old saying goes, a penny saved is a penny earned.

Let’s look for example at your own employment…does your employer have a 401k or 403b plan? If so, are you enrolled? And if you are enrolled, are you taking advantage of the employer match if it’s available? Do you have your contribution set up so that it’s automatically deducted from your paycheck each month? All these things are simple to set up and easy to maintain, and most importantly they will start you on the road to saving for retirement. And speaking of that road…

One our favorite sayings at TFG is, “if you don’t know where you’re going, any road will get you there.” The poll revealed that people with a written plan have saved three times more than those without a plan, and they feel more confident about their ability to retire. When those without a plan were asked why they did not have one, they expressed that they did not have enough assets to merit making one. We must break the erroneous thinking that because one doesn’t have any money, they don’t need to have a plan. The truth remains…if you make a plan, you tend to have more money.

Many people also claim they don’t know how to make a plan. Of course, that’s where a Certified Financial Planner can help. Engage their services. In addition to your advisor, there is a wealth of free advice that can be found on the web, or even through your employer.

Inaction and ignorance are no excuse these days. Many people are relying on Social Security to be their retirement plan, but anyone who listens to the news should know better than to put all their eggs in the government’s basket. I know this may sound scary, but think of it as a wake up call. No matter what your age and income, you CAN move forward on the road to retirement, it just takes one step at a time. Take control of your life…take control of your future…and make a Plan now!

How can Tull Financial Group help you? Contact us to find out!

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