saving for retirement

How To Start Saving For Retirement

Everyone deserves to have a comfortable retirement after decades of hard work. But to so many Americans, saving for retirement seems complicated, intimidating, and a choice that can be postponed for the future. However, there are so many little choices you can make every month to start saving for retirement–and they aren’t difficult at all!

All you need to know are a few practical basics on how to start saving for retirement. Sometimes you just need a jump start to get you going. Once you begin saving, you will feel more comfortable about the process and adjust how much and how often you allocate funds.

Here are some great ways to start saving for retirement:

  1. Have an Emergency Fund

You might think an emergency fund has nothing to do with saving for retirement. But if you have no emergency fund and you experience a financial emergency, where will you turn for cash? That’s right, your retirement fund! Cushion yourself for unexpected bills with at least $500 to $1,000. That way, all the money that goes into your retirement fund will stay there!

  1. Pay Off High Interest Debt

This might seem unrelated to retirement as well but if you have debts collecting interest, then you are losing money you could be investing in high interest retirement accounts. Try to pay down a majority of your debts by prioritizing higher interest debts. These debts can include credit cards, title loans, auto loans, and student loans to name a few.

  1. Regular 401(k) Contributions

If you are lucky enough to have an employer sponsored retirement plan like a 401(k) or a 403(b), then take advantage. Many companies will match your contributions, meaning that you will receive even more in your savings right away! Contribute to your retirement account often and regularly to start saving off on the right foot.

  1. Create a Financial Goal

After you’ve taken care of various other aspects of your personal finances and really got your 401(k) going, it’s time to sit down and create a financial goal. Once you feel comfortable, take on a more aggressive savings plan. Determine how much you’d like to have saved by the time you hit retirement and when you would like to retire. Do the math to figure out how much you are aiming to save monthly or annually.

  1. Figure Out Where to Put Your Money

Where you place your savings depends on how many years it will be sitting and gathering return. For shorter term investments, you can look at online savings, money market accounts, or short-term bond funds. For longer term accounts, you could look into a Roth IRA, traditional IRA, stock investments, etc. If there will be a large amount of money going untouched for a few decades, you want that money to accumulate as much interest as possible, so you get more bang for your buck.

You don’t have to be overwhelmed by the thought of how to start saving for retirement! When you come at it from the right mindset, saving for the most relaxing chapter of your life can be simple. Give yourself peace of mind knowing that your future is secure by starting to save today!

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What is the Average Net Worth of Retirees?

Average Net Worth of Retirees

Many people dream of the day when they will longer  be part of the daily grind. If age were the only requirement, I think it is safe to say most of us would retire as soon as possible.  But how much money should you have saved for retirement before you hang up your work boots? This answer will differ from person to person. The first step is making an honest assessment of your financial situation versus the average net worth of retirees. An easy way to achieve this is by figuring out your net worth and comparing with others in the same age group here. These figures can provide a clearer picture to help you plan for your future.

What is Net Worth?

If you feel you are ready to join the ranks of retirees, you should have a keen sense of your net worth. It is one of the strongest indicators of your financial status and an important tool to help you reach your retirement goals. You can calculate your personal net worth with some basic math. First, you need to add up the total value of all your assets and your liabilities. Then, subtract your liabilities from your assets to determine your personal net worth.

You should consider all assets, including bank accounts, stocks, bonds, mutual funds, real estate holdings, retirement savings, and partnerships in your tallies. All your debts, loans, and mortgages would fall on the other side of the ledger. This number will either be positive or negative, depending on the amount of debt you have accrued.

The Average American’s Net Worth at Retirement

The three major contributing factors to your net worth are home equity, retirement accounts, and cash savings. According to the most recent figures compiled by the U.S. Census Bureau in 2015, the national median for homeowners over the age of 65 was $201,500. Bear in mind that this figure is limited to households and may not take into account for the homeless or other members of the household who would not qualify as retirees.

Data collected from the Survey of Consumer Finances indicates that the total value of retirees’ assets has nearly doubled in the last 20 years and accounts for a large portion of a retiree’s net worth. However, it also means that they carry more debt due to mortgages. The median net worth of retirees when home equity is excluded drops to $59,780. The majority of the remaining funds are tied to retirement accounts while cash savings only account for a small fraction of a person’s overall net worth.

How Much Should I be Saving?

Most financial planners agree that a good rule of thumb for retirement is to save at least ten times your annual income. This figure may vary based on your lifestyle and spending habits, so it’s wise to sit down with a professional to discuss your options and decide what is best for your circumstances.

For those who are struggling to make ends meet, pay off student loans, and refinance home mortgages, contributing to your retirement funds may seem like a low priority. However, in a society where the future of social security is uncertain and employers offer less comprehensive pension plans, one thing is perfectly clear; it’s never too soon to begin thinking about retirement.

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