Americans’ finances are being squeezed as inflation pushes up prices on things such as rent, groceries and gasoline. As a result, many are putting off saving for retirement. But the longer retirement savings are pushed back, the harder it is to catch up.
Most people either put off saving for retirement until it’s so late that they have to play catch up, or they simply set aside as much as they can with no further planning. But the reality is, without considering possible pitfalls and opportunities along the road to retirement, you can find yourself facing some major regrets.
This is why it’s helpful to know some of the worst mistakes being made today when it comes to not planning for the reality of retirement.
You won’t be ready for emergencies: Many people underestimate the expenses they’ll face in retirement.
Most advisors recommend having three to six months’ worth of emergency savings during your working years. In retirement, you may want to increase that to 12 or even 18 months’ worth if you want to be on the safe side and ensure that you’ll have enough money to cover any curve balls life may throw at you.
Long-term care needs can derail your plan: When most people think about saving for retirement, they look at their current expenses, factor in inflation, and consider the kind of lifestyle they would like to maintain as a retiree. This kind of thinking misses some likely realities related to healthcare needs, medications, and long-term care. Individuals 65 or older have a 70 percent chance of needing long-term care services in the future, but only 11 percent purchase long-term care insurance. The rest are left scrambling to cover costs when the time comes.
Tax benefits: Many of the retirement plans and investment plans in India also provide tax benefits. You also get tax-savings on health and life insurance policies under section 80C of the IT Act. So, by starting your retirement planning early, you not only get to generate considerably higher returns until the time you retire but are also able to reduce your tax burden.
Outliving your resources: With medical care continuing to improve and the average human lifespan increasing, running out of money is a very real risk for people who live into their 90s and even beyond. By 2050, average life expectancy may increase by a full decade, and people may reasonably expect to live to 94. That being said, your retirement savings may need to last for multiple decades.
It’s Never Too Late to Start
You are better off choosing almost any investment option and starting to save now rather than putting it off.
If you have a retirement plan at work that you haven’t signed up for, do it today. Don’t wait. Start the contributions now, even if you can afford very little. If you don’t have a retirement plan at work, sign up for a Roth IRA and start contributing, even if you can afford very little.
Make moves in your life (like adopting frugality or paying off debts) that will allow you to bump up those contributions as soon as possible. That way, you’ll be as ready for retirement as you can possibly be, and that’s one less little piece of background stress on your shoulders as you move through the many years of your life. If you’re looking to put away more, start by re-evaluating how you spend or putting away small amounts of money with each paycheck.
As you approach retirement age, it could be time to look at new, innovative ways to make your savings go further…
Getting the Help You Need
If you set a realistic goal and are proactive about reaching it, you’re more likely to succeed.
If you’re looking for ways to make your savings go the extra mile, the experts at CKS Summit Group design plans which are specifically structured to limit downside stock market risk. This allows us to protect our client’s assets while providing them with strategies for achieving effective tax reduction and inflation protection.
By taking a fresh new look into your retirement income, you can achieve safe, healthy growth of your savings with preservation of your principal balance. You have nothing to lose when setting up your complimentary strategy session with us, and everything to gain.
Don’t put off financially planning for your retirement. There’s help out there in making your savings grow when you need it most. Step one starts here.