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Are You Saving Enough for Retirement? Probably Not

Are You Saving Enough for Retirement? Probably Not

 (DPC)

By Monday, 27 February 2017 08:40 PM Current | Bio | Archive

Everyone knows they need to put money away for their retirement. However, it seems many people know it on the same level they know that they have to floss every day. The knowledge is somewhere in the back of their mind, but it doesn’t cause them to take any significant action. This is why most Americans are drastically unprepared when it comes to retirement savings.

Americans and Retirement

A survey last year by financial website GoBankingRates found that about a third of Americans have no retirement savings at all. Another survey by the Economic Policy Institute puts that number at nearly half.

What’s more, even those who are saving aren’t putting away nearly enough. The median amount that the average American family has saved is just $5,000. More than half of Americans have less than $10,000 saved, and 70% have under $50,000.

That’s for all adult Americans, though. Obviously, millennials who are just entering the workforce will have a lot less saved up than baby boomers who are just about to leave it. So what’s the median retirement savings for couples ages 50 and up? According to the EPI survey, it’s only about $17,000.

Reasons for Low Savings

There are a number of reasons why Americans are so unprepared for their retirement. For one thing, a lot of people don’t even start thinking about setting up an IRA or 401(k) until they’re in their 30s or 40s. That lost time leads to a lower amount saved up once they finally leave work.

There’s often a disconnect in the mind between yourself now and yourself 20 or 30 years down the road, to the point where you can even regard your future self as a separate person. Therefore, taking money out of your paycheck to put into a retirement fund may seem like losing that money and giving it to someone else. What people fail to consider is that the sooner they start saving, the longer their investments have to increase and multiply, and the more they’ll ultimately end up with.

Even people who do save generally still aren’t putting away nearly enough. There’s often a tendency to underestimate just how much you’ll need once you retire. Most people end up living longer than they anticipate. They may save enough to last them 20 years after they retire, but end up living 25 or 30.

A lot of people also fail to factor inflation into their savings. The amount you put away now won’t go as far when you withdraw it 10, 15, or 20 years from now. Because of this, many Americans, even if they DO hit their retirement goals, find they still don’t have enough to live on, and their savings has to be stretched much farther than they anticipated.

The Importance of Diversification

So let’s say you do start saving as early as possible and put away enough money to account for your full life expectancy, including inflation, medical expenses, and more. You still might not be out of the woods when you retire.

When the economic crash hit in 2008, Americans lost an estimated $2 trillion in retirement savings. Many people saw their nest eggs severely depleted, after working tirelessly for decades to build them up.

This sort of thing could easily happen again. The money you put away is invested in the markets, and if those investments go south, you could be left with nothing. That’s why it’s important not just to save money, but to protect yourself against this type of sudden, unexpected loss.

Gold is the perfect safe haven in this regard. As a physical commodity, it tends to keep its value over time, resisting inflation, unlike stocks and other types of investments

Furthermore, when the markets go down, gold tends to go up. Therefore, if you lose your investment in the stock market, you will avoid losing your savings. Sadly, a lot of people still haven’t learned the lessons taught to us in 2008. Especially in times of economic downturn, a gold IRA is the smartest way to diversify your retirement accounts.

How Much Should You Save?

So when should you start saving for retirement, and how much should you put away? The basic answers to these questions are, “As soon as possible,” and “As much as possible,” respectively. It’s never too early to start saving, and as long as you’re working, you should also be building up your nest egg.

Some financial experts will provide guidelines like, “You should have three times your income put away by the time you’re 45.” Really, though, it all depends on your income.

That will determine not only how much you should save, but how much you’ll need in order to maintain your basic standard of living.

A good rule of thumb, though, is just to make the maximum allowable contributions each year to your IRA and/or 401(k). If you have an IRA or Roth IRA, the IRS allows you to contribute $5,500 per year, or $6,500 if you’re over 50. If you have a 401(k), you can contribute $18,000 annually, or an additional $6,000 if you’re over 50. Those contribution limits also go up periodically, as the cost of living rises.

No matter how old you are or what your current income is, it’s essential to plan for your future. If you don’t have enough saved up for retirement, you could find yourself needing to stay in your job longer than you anticipated, or take another, part time job just to make ends meet. The sooner you take an active interest in your retirement savings, the more secure your future will ultimately be.

 

Trevor Gerszt is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.

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TrevorGerszt
A good rule of thumb, though, is just to make the maximum allowable contributions each year to your IRA and/or 401(k).
saving, retirement, gold, ira
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2017-40-27
Monday, 27 February 2017 08:40 PM
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