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Tags: Retirement | algorithims | bonds | funds | stocks

Tech Can End Being Broke in Retirement

Tech Can End Being Broke in Retirement
(Dave Bredeson/Dreamstime)

Larry Alton By Wednesday, 18 April 2018 10:55 AM Current | Bio | Archive

How do you plan to retire? Will you retire early with millions in the bank, or contemplate working indefinitely because you don’t have anything saved? If you’re like most Americans, you’re closer to the latter than the former.

According to the latest data, nearly half of Americans have less than $10,000 saved for retirement, and are at risk for retiring with next to nothing in the bank. So how has this become such a major problem, and how could new technology help us close the gap?

The Motivating Factors

Let’s start by looking at:

  • Living paycheck to paycheck. As many as 78 percent of full-time American workers currently live paycheck to paycheck. In other words, they’re making just enough to keep the bills paid, and aren’t able to create a big enough surplus to stock some cash away for retirement.

  • Failing to Understand the Importance. Some workers simply don’t understand the importance of saving for retirement. Either nobody taught them about the prospect of saving, or they’re unfamiliar with the limited social security benefits they’ll receive in the future.

  • Having no consistent plan. Still others are aware of the importance of saving and have enough money to save, but have no consistent plan for that saving; accordingly, they neglect the important step of committing those savings.

How Can Tech Help Improve This Situation 

  • Better credit monitoring. New mobile apps and online companies are putting an increased emphasis on helping customers build better credit scores; these apps typically help a customer more fully understand their financial position, including their current assets and liabilities, and where they stand in comparison to the broader population. It also provides them with the opportunity to improve their credit score, so they have more financial opportunities (such as buying a house, or taking out a loan for a business).

  • Automatic Savings Plans. There are also new apps like Acorns and Rize, which are designed to help consumers save money automatically. They may round up your purchases and put the extra cents in a designated savings account, or withdraw a finite amount of money out of each paycheck, so you don’t have to take the manual action of saving it yourself. Either way, it makes the process more consistent — and requires less action on the customer’s part.

  • New Income Opportunities. Technology also offers more opportunities for secondary streams of income. Apps like Uber and Airbnb make it possible for almost anyone to use their existing assets and abilities to pick up some extra money on the side; this is incredibly useful for people living paycheck to paycheck. They can use their primary income to cover the bills, and the extra income from their side gig to save for retirement.

  • Educational Tools. There are also dozens of websites, apps, and interactive tech tools anyone can use to improve their financial literacy. Researching best practices for saving, experimenting with a compound interest calculator, and even running mock experiments with investments can all make it easier to comprehend the importance of saving for retirement — and give people the knowledge and experience they need to do it. Since most of these resources are either free or inexpensive, education is more available than ever.

  • Investment Potential. It’s also important to acknowledge the new tools that make it possible for even amateurs to get involved in investing. Robo-adviser services like Wealthfront and Betterment can invest your assets automatically in the stocks, bonds, and funds its algorithms think are best for you, and no-expense apps like Robinhood make it possible to trade stocks for free. With investing cheaper and easier than ever, more people may be incentivized to get involved.

With one in three Americans having zero dollars saved for retirement, there’s ample room for growth in this area; almost any technology that makes it easier to save could have an impact on this retirement epidemic. It remains to be seen how these new apps, devices, and possibilities will affect the American population, but they’re only going to get better in time.

Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant. Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. To read more of his reports — Click Here Now.

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With one in three Americans having zero dollars saved for retirement, there’s ample room for growth in this area; almost any technology that makes it easier to save could have an impact on this retirement epidemic.
algorithims, bonds, funds, stocks
Wednesday, 18 April 2018 10:55 AM
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