Here we go again, right? It's difficult to imagine what you will be doing for lunch today, never mind taking a trip far (or not so far) into the future to see what life will be like when you ultimately retire. So, it's easy to see why retirement is such an abstract concept for so many people.
Many individuals who are currently at or near retirement age (mostly Baby Boomers) got a much later start in life on retirement savings, primarily since employer-sponsored 401(k) plans are a relatively new concept. The alternative of course is to put all of your hope and faith into Social Security - which unfortunately, does not pay out anywhere near what is needed to maintain the lifestyles of these individuals. This is a system that has slowly been drained thanks to the folks in Washington over the past few decades and now there is little-to-no hope that this will be a resource for myself or my peers to utilize when we hit retirement age...even if we paid into the system all our working lives.
Here is a scary statistic...
In June 2015, the US Government Accountability Office collected data and performed an analysis that showed the average American between the age of 55 and 64 has accrued just $104,000 in retirement savings outside of social security.
Sounds like a lot? Think again.
Bear in mind that this amount is often invested in the form of an annuity, which does not pay a lump sum but gives you a monthly payment each month for the rest of your life (which is calculated using a whole other complex process) - which could be 30+ years beyond when you retire. This would ultimately mean that your monthly payout from this annuity would be about $310 each MONTH! Anyone who has the means to save for retirement in the first place cannot live on $310 per month, $3,720 per year, PLUS pay taxes on top of that. It's a scary thought.
So, I'll ask again - can you afford to retire?
If the answer is, "um, no," then you're in luck - it is never too late to get into saving gear and learn some habits that will get you back into retirement planning and saving. If the answer is, "heck, yes!" then good for you and hope you are encouraging others to do the same.
STAY TUNED FOR THE LAUNCH OF A NEW SERVICE available to all GradMoney readers coming next week! In the meantime, make sure that you listen to the investing podcast this afternoon!
Greetings, GradMoney Readers!
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