SAVING FOR RETIREMENT  

 

 

Money isn't the most important thing in life, but it's reasonably close to oxygen on the "gotta have it" scale.  
 — Zig Ziglar

I have now the gloomy prospect of retiring from office loaded with serious debts, which will materially affect the tranquility of my retirement.
— Thomas Jefferson

Saving for Retirement

"How much money do I need to retire?" is a common question typed into Google. 

Variations of this question include:

• How much do I need to retire? 
• When can I retire?
• Is 2 million enough to retire?
• How much should I save for retirement?
• How much money do I need for retirement?
• What is my retirement number? 

As indicated in my book How to Retire Happy, Wild, and Free, planning for retirement, if and when it is pursued, generally focuses on financial issues. How to save for retirement, surprisingly, is not easy even for many of the high income earners.

Recent studies show that Canadians and Americans plan to work way past the retirement age of 65 due to the fact they don't have enough retirement savings.

Yet many of these people are fooling themselves. Fact is, two-thirds of Canadians retire before the full Canada Pension Plan/Quebec Pension Plan benefit age of 65, often times involuntarily due to health reasons, having to take care of loved ones, or not being able to find a job.

Unfortunately, according to the National Save for Retirement Week website, research has shown that nearly half of all workers in the United States have less than $25,000 in total savings and are saving for retirement very slowly. Even more startling is the fact that slightly more than one in five American workers say they have no savings of any kind. 

You have to be a real clown not to have a financial plan and be saving for your retirement. Right?  Not really, you would just be among the approximately 80% of Canadians who don't have any sort of comprehensive financial plan, according to the Financial Planning Standards Council.
— Garry Marr, Financial Post

We only need to save $49 a month for a happy retirement. That's how much we'll need for our cable TV bill.
— from Glasbergen cartoon 

Why Americans Are Not Up to Par

 with Their Retirement Savings

I mentioned how Billy Boy Franklin stated, "Americans have mastered the art of being prosperous though broke." In other words, they have not saved enough for retirement.

Here are some 10 signs that many Americans are not planning adequately for retirement simply because they are not saving enough money for retirement.

1. Roughly half of all working Americans don't participate in a retirement plan or don't have an employer-sponsored plan in which to participate. 
2. A huge number of adult Americans — by one estimate 150 million of a potential 200 million — aren't saving for retirement in any meaningful way, if at all. 
3. Dave Ramsey, a personal-finance expert and talk-radio host, cited a recent poll in which 80 percent of Americans said they believed their standard of living would go up at retirement. 
4. "Our culture today tells us that we deserve to have everything we want because we can charge it," Dave Ramsey says. "Previous generations thought you could only have something if you could pay for it. Their lifestyles were much simpler, and retirement was a time to simplify even more." 
5. Many Americans are counting on Social Security for their retirement. Social Security, however, stands on unstable financial ground. 
6. The average total income for those 65 and older in America is $25,610, and the median is a meager $16,770, according to EBRI Notes, a publication of the Employee Benefit Research Institute. That means retirees are living on roughly one-third of their pre-retirement incomes. And that's a far cry from the 70 percent to 80 percent that income replacement experts suggest Americans need to maintain their pre-retirement standards of living.
7. Most Americans spend more time planning for vacations and holidays than planning for their retirement, according to the Employee Benefit Research Institute. Seventy percent of workers say they do not have a formal, written financial plan. According the Retirement Confidence Study from the Employee Benefits Research Institute, only 2 in 5 workers have attempted to do a retirement savings needs calculation, and one-third of those who have don't remember the result. 
8. A recent study indicated that said a whopping 21 percent of Americans see winning the lottery ( the retirement plan for stupid people) as an important wealth-building strategy. The odds of winning the Mega Millions Jackpot are said to be one in 175 million. 
9. Another 14.9 percent of Americans are relying on an inheritance to carry them through. Of the 20 percent of Americans who will inherit some money, most will receive less than $49,000. This is enough to buy a nice new car and perhaps a garage to put it in, but certainly not enough cash to fund a carefree retirement in which the only thing to worry about is where to retire. 

10. Talk about credit crazed — the average American household owns 13 credit cards, and 40 percent of them carry a balance, up from 6 percent in 1970. The good news is that the no-money-down mentality may not be so pervasive any longer — hopefully it will be put to rest forever. 

If you are having a hard time saving enough money for retirement you may want to read Ernie Zelinski's most recent book, an inspirational novel called Look Ma, Life's Easy: How Ordinary People Attain Extraordinary Success and Remarkable Prosperity.

Most American retirees have very little money and will have no retirement income to speak of because they never learned how to save their cash. The typical 50-year-old American has earned a great deal of money in their life time but according to one financial report, has savings of only $2,300.

The Ideal Retirement Plan: "Marry an old rich broad and wait for her to die."
— Ivan Wilson (commenting on an online article about retirment planning.)

The median retirememt income for American retirees 65 and over was just $18,208 in 2008 — a quarter of these retirees had incomes under $11,139, according to Patrick Purcell, an expert on older workers and pensions with the Congressional Research Service.

The average Social Security recipient age 65 and over receives just $12,437 in annual benefits, he said, and among individuals 65 and older who received income from financial assets, half received less than $1,542 last year.

Hopefully you won't be in the average or lower when you submit your retirement letter and start your retirement.

1. Start saving immediately regardless of your age — even a little amount goes a long way and sets you up for future success.

2. If you have a hard time saving money, create a budget and control your spending.

3. Set financial goals and monitor your progress regularly.

4. If you work for an organization, sign up for it's pension plan.

5. Always make full use of tax-favoured investment vehicles.

6. Set up an automatic savings program with at least 15 percent — preferably 25 percent — of your income targeted for your retirement account.

The Good News about

" How much money do I need to retire?"

Particularly if you are a baby boomer quickly approaching retirement, you may be concerned whether you are saving enough for retirement.

The good news is that many people may be overestimating how much money they need once they leave the workforce. Several research studies show that people generally spend a lot less as they age. (Even so, this is not a reason to become casual about how much you are saving.)

 

For instance, my friend Jim took early Canadian Pension Plan of only $435 a month. This is his total regular income and he has no assets to speak of except for an Airstream trailer and a older car. His income is supplemented by a few hours a week work that he gets from a mutual friend who manages a medical clinic. Jim lives pretty well and is one of the happiest people I know. He does admit that he wishes that he had a bit of money saved for emergencies, however.

Another friend George is 65 and collects about $1,450 in Canada Pension Plan and Old Age Security. This is his total income. George lives in a subsidized apartment. Get this: George saves $450 to $500 a month.

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More Quotes Relating to Retirement Savings

and "How Much Money Do I Need to Retire"

This may come as a shock to some, but if you really want to get rich, the first thing you need to learn is how to spend money — or NOT spend it — as the case may be. And what with national consumer debt and bankruptcy numbers reaching ball time highs in the U.S. in 2008, it's apparent that there's more than just a little foolish spending going on.
— Rosalind Gardner

The sports car and sailboat are investments for my retirement. I'm using them to attract a woman who support me in my old age.
— Glasbergen talking to financial consultant

Retirement can be a great joy if you can figure out how to spend time without spending money.
— Author Unknown

I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left.
— Voltaire (in retirement)

Retirement: The time in your life when time is no longer money.
— Unknown wise person

It's an absolute fact that as people get older they spend less money.
— Rick Ferri president of money-management firm Portfolio Solutions in Troy, Mich.

You can be young without money but you can't be old without it.
— Tennessee Williams

By the time I have money to burn, my fire will have burnt out. 
— Author Unknown

My retirement investments are diversified. Blue lottery tickes, yellow lottery tickets, green lottery tickets, red lottery tickets ...
— from Glasbergen cartoon 

Don't forget about How to Retire Happy, wild, and Free (The World's Best Retirement Advice Book).

WEBSITE COPYRIGHT © 2020 by Ernie J. Zelinski
Author of World's Best Retirement Savings Book
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