Planning for Retirement: Good News. It’s Not Too Late.
November 2, 2018
For many Americans, planning for retirement hasn’t been a regular part of their financial planning. The causes are different for every household, but nearly half of all Americans have no retirement savings at all, and for those that have been able to save, the median balance is only $10,000. Currently, the average contribution rate to a retirement account is only around 3%.

Americans are feeling the expected impact of their inability to save, with only 17% feeling confident in experiencing a comfortable retirement in the future. These types of statistics lead advisors to counsel their clients to take drastic measures: either delay retirement by 10 years or learn to live on a smaller budget so that up to 60% of their income can be directed to saving for retirement.

For many Americans, these options aren’t realistic. Scaling back a budget to only 40% of what a household is accustomed to is a challenge but working an extra 10 years with potentially escalating age-related health challenges could also be unrealistic.

It’s important to note that strategies like these are not universally applicable. Each household has different needs and circumstances and requires a personalized and specific solution for retirement planning. With that in mind, there may be two reliable practices that could help many households get back on track for retirement planning:

Set aside six percent. This action particularly benefits younger investors, but it also helps those in their 40s and 50s who are behind in planning for retirement. It helps to begin this practice and then look every six months at how it is impacting their retirement savings. It won’t take long to see progress.

Investors may also be encouraged when they see how their retirement savings stack up to others in their age group. A little sense of competition with peers can spur more positive behaviors.

Best of all, increasing savings from three to six percent isn’t likely to force a household to put austerity measures in place. While there may be a bit of a cinch on the budget at first, this change is relatively easy to accommodate.

Delay retirement by two years. Working for another 10 years is a hard concept to consider when you’re reaching retirement age and beginning to count the years. Two years can help build up savings while still presenting a retirement date that allows time for plenty of leisure and fun. It’s also good to do your homework to see how a delay of two years impacts social security benefits. It might be worth a short delay.

If you’re planning for retirement, don’t worry if you find that you’re a bit behind. Our team at Lawson Kroeker Investment Management can help you build an investment portfolio that will help ensure a secure future while allowing you to enjoy life right now. Contact us for an appointment. There’s no time like today!

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