Do I have enough to retire?
Wondering “Do I have enough to retire?” For most of us, the answer is “no.” A shocking 35% of people have no money saved for retirement at all, plus the many more who haven’t saved enough. These people will find out what happens if you don’t save for retirement – and you don’t want to be among them.
It’s easy to blame the economy, your job or your expenses, but the truth is that discovering how to have enough money for retirement depends on your mindset and your determination over anything else.
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Do I have enough to retire?
This is one of the most common questions Tony gets from those wondering how to have enough money for retirement. But your retirement fund isn’t made up of only your savings. You also need to understand how to make a money machine using investments, compounding interest and more. Stop thinking about the amount of money you have, and start thinking about how you can make that money work harder for you.
To answer the question, “Do I have enough to retire?” the obvious first step is to determine how much you need. You’ll want to have enough money to not only meet your basic needs but to live the life you’ve dreamed of. Do you want to travel, take up a new pastime or finally get those home renovations done that will increase its value? Or do you just want to downsize your home and spend your time relaxing? Create a budget or use an online calculator to determine how much you’ll spend annually.
Next, you need to ask yourself if your investments are producing enough for you to retire comfortably. Don’t have any investments? Get in the game. You won’t be able to save for retirement in cash alone. You’ll need to not only take advantage of a retirement plan like a 401K or an IRA, but also ensure that your money is invested wisely and will continue to produce for you after retirement.
What happens if you don’t save for retirement?
It’s concerning that for most people, the answer to ““Do I have enough to retire?” is no, especially considering even a small investment can go a long way. Tony tells the story of Theodore Johnson, a UPS driver who never made more than $14,000 a year – yet retired with $70 million. He had a friend who knew what happens if you don’t save for retirement and convinced him to save 20% of his paycheck.
Know that if you don’t save for retirement, you won’t be able to depend on anyone else. The average Social Security payments total just over $18,000 annually, which is certainly not enough money to retire on. And while 68% of current retirees have a pension as a source of income, those are also on the decline. Among Americans currently working, only 22% have a pension.
When you don’t save for retirement, you end up financially insecure. That causes stress and a low quality of life – two things that probably don’t come to mind when you think of your “golden years.”
How to have enough money for retirement
What happens if you don’t save for retirement is enough to scare anyone into prioritizing their investments. But considering that nearly one-third of middle-class Americans can’t afford to cover a $400 emergency, it can seem nearly impossible for many of us to save for retirement. If you’re thinking about how to have enough money for retirement, there are small steps you can start taking today.
Get in the game
It’s time to stop wondering “Do I have enough to retire?” and get started saving. Make your retirement savings a priority by always paying yourself first: put at least 10% of each paycheck into a retirement fund. If that seems like a lot, you can start lower and work your way up – but remember that the longer you wait, the less compound interest you’ll earn. Consider also investing in a form of passive income like real estate investment trusts, money market accounts or index funds. These are all excellent low-risk options for beginners.
Learn the basics of financial planning
Once you’re in the game, you’re on your way to becoming an owner, not a consumer – a key way to discover how to have enough money for retirement. But to really win at the game of money, you must learn all the details of how to play. Learn about important financial terms like expense ratio, sales charge and exchange fees. Find a financial advisor you can trust who can show you how to practice proven financial planning strategies. Don’t just get in the game – master the game.
Pick the right plan
A big part of financial planning is picking the right retirement fund. Many Americans are invested in 401Ks as part of their employee benefits package. If you don’t have an employee-sponsored plan, you’ll open an IRA or a Roth IRA. No matter what plan you go with, watch out for fees. Paying even 1% more in fees can result in a loss of hundreds of thousands of dollars over the lifetime of your 401K. Make sure you learn about the fees involved in your plan so that you can advocate for yourself.
Track your progress
Goal setting is essential to every area of your life, but especially financial planning. You wouldn’t try to lose weight without setting a goal and weighing yourself periodically, and you can’t answer the question “Do I have enough to retire?” that way either. Use SMART goals to create benchmarks that are realistic and measurable, then track your progress. Make adjustments to your budget along the way to ensure you save enough for retirement.
Want to retire comfortably?
Don’t find out what happens if you don’t save for retirement. Get Tony’s latest book The Path and accelerate your journey to financial freedom.