I’m in my 40’s and my parents have passed on as one would expect when they have kids at age 55 and 45. I know what you are thinking, 55 is a little old to start a family. Let me explain, I am the youngest of 6 kids and my mom was Catholic. Their experiences in an America that wasn’t rich is one of the most valuable gifts they gave me.
When I was 5, I remember my parents bringing me to the Dairyland State Bank for my first passbook savings account. This was the beginning and almost the end of my savings, as I was told I’d get my money back but not in the form of the cool $2 bill I got for my birthday (maybe we all should have been a bit more wary of banks especially in 2008). Moody’s Analytics says that the savings rate for people younger than 35 is a NEGATIVE 2%. If you are in this group, perhaps you think that social security and other programs will be there to provide income. I want to share with those not saving, that when I do financial planning, I include only ½ of the current benefit. (Read, currently there is not enough money for your generation). I am sure the benefits of compounding is not a new concept, but it is real. I have not even talked to you about the use or lose benefit of the employer match that is currently available in most company sponsored retirement plans. A lot of things will happen before your retirement, but my friend gave me a rule of thumb that seems to work in many cases; ‘if you can max out your retirement savings into the plans you have available, you should be able to retire with a similar lifestyle to what you have had while working.’
When my dad was middle aged, each month a portion of the check from the milk (he was a dairy farmer) was immediately deposited into a CD. He would tell me, this is for when I am old. Most of my generation, the generation Xers who are middle aged, are just now starting to ask questions. I was sitting at our cabin by the lake last weekend when a friend asked the popular question, ‘so just how much do I need to retire?’ This question should not have surprised me. The 2012 Insured Retirement Institute Report indicated that only one-third of GenXers are confident in having enough money. The other two-third self-reported the following:
- 41% have saved less than $100,000 for retirement
- 15% made early withdrawals from their 401(k) plans
- 23% stopped contributing to their retirement accounts
- 22% stopped contributing to college savings plans
If you are the two-thirds majority that is not confident that you have enough money, now is the time to start getting serious. Make a plan for savings. See a financial planner so you will know what you will need to save.
Hello baby boomers. On April 13, 2015, CNBC reported that only 60% of baby boomers have any retirement savings and only 27% are confident they will have enough for retirement. While I don’t believe anyone who is reading this has no savings, I get the question all the time, ‘Am I ready for retirement?’ Although no one can guarantee this, you can know with the best science available. I think the decision is important enough to put away your thoughts of embarrassment or fear and get a plan.
Savings is the lesson I learned from my parents. It is as true today as it was in the 1930’s. If you have met with your planner and you know you are prepared, congratulations. If you haven’t, no judgement we all start at different places. The team at APCM provides financial planning and investment management, to get started on your plan give us a call, 907.272.7575.
Laura Bruce, CFP®, ChFC®
Director, APCM Wealth Management for Individuals