http://www.washingtonpost.com/business/retirement-is-a-numbers-game/2013/03/19/b36ed882-90e0-11e2-9cfd-36d6c9b5d7ad_story.html
This article discusses the fact that most Americans are simply guessing at the amount of annual income they need to be saving in order to retire comfortably. When they calculate the actual amount that they should be saving, the gap is often large between what is necessary and what is actually being saved. Most Americans are solving this problem by planning on retiring at a much later age than intended. The EBRI says that this plan isn't always a good idea, just in case individuals aren't physically able to work as long as they want to. They advise trying to save a substantial amount by age 60. The key for many Americans to be able to retire comfortably is simply to stop consuming at an excessive rate and save rather than try to keep up with the Jones'. Americans also need to become informed of the percentages they will need to save at a younger age in order to reduce the need of having to save excessive amounts in their 40s and 50s. If Americans start saving responsibly they will be able to retire earlier, therefore opening up more jobs to younger individuals in need of work.
4 comments:
What percentage should an individual be saving each year for retirement? I think this is a widespread issue that people should be made more aware of. Being able to figure out what percent of your income you should save based on your desired lifestyle and retirement age should be something that is taught in high school before anyone gets out into the real world.
The percentage of income that an individual should allocate toward a retirement fund varies significantly depending on income and the goals of the fund. Another thing that should be considered is the risk of the investments. Now, we are able to take more risks with our long term investments, whereas 30 years from now our investments should be significantly less risky. The sooner you start saving, the better off you will be near retirement.
Saving less when you are young and saving more when you are close to retiring age seem to be the common trend in many countries and America is not an exception. To avoid the pessimistic attitude among workers about not being capable of saving enough, they should start saving as soon as they settle down with their career. It will decrease dependency on Social Security when all plans and savings and investments don't work out.
I agree with Chris' comments. I believe that Americans and young people in general (20's) need to start saving, at least get in the habit/routine of saving when your income is lower and continue that trend as your income increase. The key point is to keep your wants at a minimum and not living above your means. However, that is easier said than done!
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