Save for Retirement Today. Your Future Self Will Thank You.
In this article: If you don’t know how to save for retirement, take a look at these useful insights that will guide how you save for retirement today.
Published Jun. 23, 2020
Reading Time: 3 minutes.
Some say saving for retirement is the best investment you’ll ever make. But in your twenties or thirties, the variety of financial priorities that require your immediate attention often prevent you from thinking about how to save for retirement today. Those nearing retirement are now realizing that maximizing post-employment life and having to meet unexpected costs as the year’s pass means they must improve their savings strategies.
Few Realize the Value of Saving for Retirement
Younger generations often have the mentality that the future will sort itself out and that one’s retirement life will be heavily dependent on social security. However, few are aware that social security only covers 40 percent of retirement expenses. In fact, less than half of a retiree’s income comes from such contributions.
As a result, even family structures are changing! Lack of savings in retirement is a major reason for the gradual shift towards older generations living with their children. Retirement goals are different for everyone. That said, some recommend a minimum of 70% to 80% of a person’s pre-retirement income (peak career) in addition to social security in order to achieve and maintain a comfortable standard of living during retirement.
Thus, the sooner you begin saving for retirement, the better. By realizing the value of saving early for retirement, you’ll likely be able to amass a hefty savings account – just what you need to enjoy in your later years. Here are some reasons as to why retirement is the best investment to date.
America’s Aging Population
Contrary to popular belief, retirement life is often longer than people envisage. Today, Americans are living in a country where celebrating 100 years of life is the new normal. In 1960, a 65-year-old person was expected to live between 13-17 years beyond their current age.
Nowadays, this expectation has risen to 21.5 years, where furthermore, one-third of Americans are anticipated to reach the age of 90, and one out of seven, go beyond the age of 95.
With American life expectancy steadily increasing, seniors approaching their retirement years are being forced to re-evaluate their 20-year pension plan or face the risk of outliving their money. So how can you start saving for retirement today?
Think About the Price Tags When Saving
What many people forget to consider is that retirement comes with a huge price tag. Retirees often find themselves with more time to fill, so saving can allow you to live the lifestyle you desire. Retirement should be the time of your life to do exactly what you want to do. So it’s important to save proactively for the activities that you will both enjoy and that will suit your financial situation, rather than letting others dictate what your days will look like. Regardless of how much money is in your nest egg, focus on mapping out your savings for retirement with your hobbies and passions in mind.
Other price tags to keep in mind include changing family dynamics, long-term care, and medical requirements. The cost of healthcare is widely underestimated by the American population with many unclear about what their healthcare system covers during retirement age. As life-expectancy increases, so too does the demand for long-term healthcare and all involved costs.
Invest in Your Retirement
While other costs may appear more pressing now, and rightly so, putting away small sums on a regular basis will greatly contribute to your retirement nest egg and make a difference to your post-employment life. Take the time to think about how to save for retirement today, your future self will thank you.