Saving money for retirementDate posted: 1/3/15 11:15:00 AM
More money, more problems. While that's not necessarily the case for individuals saving for retirement, you might be surprised at how similar low- and high-income individuals view their retirement situations.
American Consumer Credit Counseling reported 86 percent of individuals making $20,000 to $30,000 annually felt they weren't prepared for retirement, while 79 percent of individuals earning $100,000 to $150,000 per year were in the same boat.
For many middle-class families and individuals, saving enough money can be an intimidating task. It shouldn't be, according to Sharon Appelman, director of financial planning and income management with Francis Financial.
"No two people have the same retirement goals and needs," Appelman told Fox News. "People with low incomes have to save proportionally, as do people who are making millions. They need to save enough to supplement their Social Security and maintain their lifestyles."
Save early, save often
It really doesn't matter what your income level is when you start saving for retirement. American Credit Counseling's Katie Ross said it's important to start saving for your post-working life as soon as possible.
"Even if you're just saving just $10 a week, before you know it, you'll have a nice little nest egg," Ross told Fox News.
Say you start saving at age 25. If you save $100 a month for 40 years, you'll have nearly $200,000 waiting in a basic savings account - assuming you receive a return of 6 on that cash - by the time you're 65.
Save for retirement or something else?
It's a tricky subject for many parents. Should they save for retirement or their children's college education? According to Northwestern University's Medill Reports Chicago, more Americans are now saving money for their own retirement compared to stowing money for their children's higher education. It's a contrast from last year when those saving for retirement and their kids' college funs was split about even, the report stated.
Kelly Campbell, founder and certified financial planner of Campbell Wealth Management, told Medill Reports: Chicago saving for college is easier to plan for than saving for retirement, which might have catalyzed the new savings trend.
"People are realizing when you decide to retire, they don't have those same options (as college fundings)," Campbell said. "As a matter of fact, it can be a little scary when you leave your employer and your steady paycheck."
A survey from Fidelity Investments reported people that of all people saving for the long term, 55 percent are saving for retirement while 33 percent are saving for their children's college tuition.
"People are expressing more concerns that they can't rely on outside sources like pensions and Social Security at the finish line given the pension reform complication," Mary Deshong-Kinkelaar, CFP practitioner and founder of Kinkelaar & Associates Co., told Medill. "And I think it's a good sign that they are being more responsible for themselves."
Get rid of your debt
If you want to start padding your basic savings account, one of the most crucial first steps you can take is getting rid of your debt - especially high-interest credit card debt.
"You have to look at where you are at with your debts, assets and liabilities," Kevin Gallegos, vice president of a financial institution in Phoenix, told Fox News. "The tough part for anyone, but the part that needs to be taken care of first, is to get rid of that debt. Debt is going to eat away every bit of savings that you have. Your interest rates on credit cards are going to be greater than any interest you get from your savings. Get rid of your debt, then start saving."
- How to save $1000 (or more) on a budget - 1/19/18
- Overlooked home maintenance for every season - 1/5/18
- Winterizing your home and finances - 12/12/17
- Retirement plan options - 11/29/17
- Best time to buy a car: December - 11/29/17