Kelly
S. from Sioux Falls, SD asks: Hello Mitch! I see an awful
lot of articles about Americans being very underprepared for retirement. I’m in
my 40s and have always been a good saver, but now I’m concerned I’m not ready
either. Any tips or insights you can offer to give me some assurance?
Mitch’s
Response:
Thanks for emailing, Kelly. It’s good to hear
you consider yourself a good saver, and being in your 40s means you have a good
chunk of time ahead of you to make improvements if need be. The fact that you
emailed me a question about retirement shows you are being thoughtful about your
financial future, which is a step too few Americans take seriously, in my view.
You’re right – there is a slew of research
studies and data points available showing that Americans are under-prepared for
retirement. I saw one recently where according to a new Boston College study,
51% of U.S. households are at risk of not being able to meet their standard of
living in retirement.1 In other words, half of the population is set
to have to make sacrifices in their retirement years — the opposite of which
should be true.
Start Planning Your Retirement Today – It’s Easy!
It’s common for people to feel that they have a lot of time before they need to start seriously thinking about retirement planning. Here’s the truth – the sooner you plan, the better advantage you will have for your financial future. No matter what state the market is in, building an effective strategy will keep you on track for the long term.
If you want help creating a long-term financial plan and investment discipline, I recommend reading our Retirement Guide. This guide will give you a step-by-step outline of how you can plan for your financial future.
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Download Your Copy of “Retirement Made Easy” Today!2
The figures have continued to get worse. In
2007 – which of course was before the Global Financial Crisis – only about 40%
of U.S. households were at risk of being unable to reach their retirement
goals. This percentage was too high then, and I think it is certainly too high
now.
I’ve written before about simple steps a
person can take to boost retirement savings and become better savers in
general. For complete and total simplicity, I will break it down into two steps
for you:
- Save 20% of every cent you make. If your
salary is $1,000 a week, then save $200 a week in a retirement plan or an
IRA/Roth IRA. Period, no exceptions!
- If you still have at least a decade until
retirement – which you likely do – it is my strong opinion you should own close
to 100% equities. To be sure, equities are not for everyone, and your risk
tolerance and investment preferences may not allow you to be that far out on
the risk curve. But I find that for most investors with long time horizons and
goals of long-term growth, equities are a suitable option.
Taking just these two steps, in my view, will
put you in a better position than a majority of Americans. The key is
committing to taking steps and being disciplined about your approach to saving
and investing.
To me, questions and concerns like yours come back to a
concept of “financial wellness,” which is not nearly as popular as other
wellness movements sweeping the nation, like keto diets, going vegan,
meditation practices, or cutting sugar from a diet. I would argue that
financial wellness is just as important as physical and spiritual wellness,
however. Being financially secure can reduce stress and give a person peace of
mind. Taking my two steps above is a good place to start, in my view.
In addition to those two
steps, the best advice that I can give you is to create a long-term financial
plan that meets your needs, goals and risk tolerance. If you start preparing for
your retirement now, you will have a better advantage when making future
financial decisions.
To help you do this, I
recommend reading our Retirement Guide.3 This guide will give
you a step-by-step outline of how you can plan for a successful financial
future, and it provides our answers to critical questions like:
- What is the best long-term approach?
- How do you manage your retirement income for taxes?
- How much should you be saving?
- And more…
If you have $500,000 or
more to invest and want to learn more about retirement planning, click on the
link below to get your free guide today!
Disclosure
1 Wall Street Journal. January 19, 2021. https://www.wsj.com/articles/more-americans-face-retirement-insecurity-11611064810?mod=markets_lead_pos13
2 ZIM may amend or rescind the “Retirement Made Easy” guide for any reason and at ZIM’s discretion.
3 ZIM may amend or rescind the “Retirement Made Easy” guide for any reason and at ZIM’s discretion.
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