If you’re saving enough for retirement you’re ahead of the 15% of Americans who have nothing at all saved. But do you have enough? Far too much of what Americans know, do, and say about retirement has to do with wishful thinking, and is not based on solid planning. There are numerous studies pointing out that Americans don’t save enough for retirement, but more than that, the plans people make for retirement aren’t always based on sounds principles. If nothing is in a retirement account by age 50, what are the chances a yacht is a future purchase? Paying attention to the money coming in to a retirement account at all ages matters more than occasionally making deposits.
- Only 5% of Americans have over $200,000 saved
- Many experts recommend a retirement savings of $1 million
- Time and compound interest will provide big benefits
Waiting Too Long
One of the main problems people experience when they don’t save for retirement is letting too much time pass before they start. It’s so tempting to young people to calculate the years they have before retirement, come to the conclusion that they have plenty of time and don’t need to start saving right away at what they might consider a “starter” job or otherwise do not consider to be their long-term career.
The wisest choice, of course, which is to put away as much as possible starting as early as possible, is also not always the possible one. With student loan debt out of control, many people coming out of college are weighed down and choose to pay that down rather than begin investing in their retirement plans, which seem so far away.
After college and graduate, law, or medical school debts are paid, people want to save for a house and car, vacations and trips, weddings and children, and before you know it the years have intervened. Letting too many years get in between you and retirement savings is a recipe for disaster. Start as early as you can, fund as much as possible, and before you have too many “grown-up” expenses, you can have the beginning of a nice little nest egg for retirement.
Getting Started In Saving
No matter your age, it’s really never too late to start saving for retirement. It’s also never too early to start saving, either. From putting away some funds from your first summer job, to putting a portion of holiday cash to the side, you can always begin making progress on saving enough for retirement age.
If you’re working for someone else, it can be the easiest thing to simply fund a 401k plan through your business. With matching contributions, many corporations want to help you save enough for retirement and since your money is taken out before you even see it, it hurts less. But your company’s 4% match won’t get your wealthy. It’s only a place to start. And you want to at least contribute as your minimum that amount the company matches. But you want to raise your own contribution as soon as you can. By the time you’re putting 15% away you should be living within the means of your money, and your account should be increasing nicely.
Saving Enough For Retirement
Doing more for yourself and your future is one of the best investments you can make. If it seems like a struggle to put money aside and pay down your debt, decide with your financial planner what makes the most sense for you to do.
If you work for yourself or with your spouse, you have additional options for retirement savings, including a Solo 401(k) and a Self-Directed IRA.
The Solo 401(k) plan is the best retirement plan for the self-employed or small business owner with no full-time employees because it is easy to set-up, operate, and administer. The business owner can serve as trustee of the plan and have total investment control over plan assets. It can be the ultimate retirement plan for those who are:
- Self-employed individuals
- People who receive a portion of their total income through self-employment activities (for example, contractors)
- Small business owners with no full-time employees
Self Directed IRA
A Self-Directed IRA LLC (SDIRA) is a type of individual retirement account that allows retirement investors to use their IRA funds to make alternative asset investments. Self-Directed IRAs are similar to traditional IRAs, but they provide more investment options to IRA holders. By using this retirement structure, you can diversify your investment opportunities and invest outside of stocks, bonds, mutual funds, and other traditional assets. You can still make traditional asset investments, but if you’re more comfortable investing in assets like real estate and precious metals, the Self-Directed IRA LLC allows you to do so. Ultimately, this diversifies the assets inside of your retirement account.
By starting early and contributing regularly, your assets can grow with your investments. Whether you choose a traditional route or something more personalized to your own needs, savings enough for retirement is more important than ever.