Back in the day, planning for retirement was pretty simple. You’d try to save a little money if you could. A few bucks here and there. But in the back of your mind you knew that you could depend on someone else. You’d get a pension from your employer (assuming you worked for a company,) and a pension from the government – Social Security. Cha ching.
Those days are kaputnicks-ville. Our Social Security is expected to run out of money in 2033. Shocker. So that’s off the table. Fuhgeddabout it.
It used to be that most companies would give their employees a pension. Old school style. The companies were on the hook to set money aside for their employees’ retirement. Then the 401k was introduced as an added benefit for higher wage earners.
Va va voom. In the blink of an eye, many employers just stopped offering pensions because it was cheaper for them, and the burden of saving for retirement fell on the employees.
According to a study from the Economic Policy Institute, the shift from pensions to 401ks has hurt the average American’s financial situation. Why?
The wealthiest workers are the ones that can afford to contribute to 401ks. In 2010, 72% of the money in retirement accounts were from the top 5% wage earners. (Economic Policy Institute)
Many employees don’t know what they should invest in. They aren’t sure which mutual funds to pick. So they do nothing because they don’t want to make the wrong decision.
Many people want the instant gratification of spending money today vs saving money for 20-30 years from now.
No One is Going to Put Money Away for You Except You
You have to take matters into your own hands. That means you have to do the saving. Pay yourself first. Automate it. You can start from scratch right now. It’s about taking personal responsibility. Because you are now Da Bank of You.
Parting words : Get your money working for you. Will getting 1-2% interest in the bank fund your lifestyle down the road? Probably not. Bankrate.com says 26% of savers do this.
You need an investment plan. Everyone’s plan is different. What’s yours? What are you struggling with right now? Leave your comments below. Maybe I can help.