Worried about how you'll support yourself during your retirement? You're not alone!
A recent report from the U.S. Federal Reserve Board found that many households in the country are not ready for retirement. Nearly 50 percent of more than 4,100 survey respondents said they hadn't financially prepared for the future. Twenty-four percent reported they had given the task little thought, while 25 percent confessed they hadn't done any planning. Furthermore, 31 percent said they didn't open a savings account or have a pension, and 25 percent didn't know how they would support themselves during retirement.
The report noted the Great Recession delayed the planned date of retirement of many respondents. Additionally, financial constraints have made many consumers feel like it's hard to save.
"The lack of preparedness is not signaled by a lack of planning alone," the report read. "Many respondents, particularly those with limited incomes, indicated that they simply have few or no financial resources available for retirement."
A small contribution goes a long way
Some respondents who hadn't begun or prioritized saving were younger and therefore didn't see preparing for the golden years as a key concern. However, saving early - even small amounts - is one of the keys to having a comfortable retirement. Most experts agree that consumers should start setting money aside while they're in their 20s. This is a time that typically involves fewer financial commitments and responsibilities, such as mortgages and the expenses of a growing family. Plus, aggressive investing is suggested, as there is more time to recover from loss.
With one of our many retirement plans, which include traditional, Roth and rollover individual retirement accounts, even small monthly contributions can grow into a sizeable nest egg. One of our wealth management advisors can help with determining which option is best for reaching specified retirement goals and explain the benefits of compounding interest. Essentially, each additional year of saving is another opportunity for an investment to show sizeable growth.
Twenty-four percent of respondents said they expect to continue working into retirement to cover some of their expenses. With careful and early planning, such expectations can be dropped and there can be more time for enjoyment and relaxation during the golden years.
For more information on effective wealth management strategies, contact Landmark Bank.
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