Saving for a secure retirement. An idea that too many of us put off thinking about and planning for, as long as possible. Few of us want to set aside a portion of our earnings today to maintain a comfortable standard of living twenty to forty years in the future. Saving is a state of mind, but it is hard to save when you can’t see the immediate benefits associated with those dollars stashed away.

Millions of Americans are in danger of not having enough money to maintain their current standard of living in retirement. According to a recent Center for American Progress report it is estimated that more than 50% of households will fall short. How is this possible and what steps can we take to avoid it?

Why are we falling short? Retirement needs have actually grown significantly in recent decades. Increasing life expectancy, rising healthcare costs and fewer corporate plans offering a guaranteed retirement income, as well as the uncertainty of social security are just some of the reasons for growing needs. The landscape is changing into one where individuals today are now largely responsible for their own retirement.

The Employee Benefit Research Institute (EBRI) published its Retirement Confidence Survey (RCS) in March, 2014. Just 18 percent of worker respondents were very confident about having enough money for a comfortable for retirement, while 37 percent were somewhat confident. However, 24 percent were not at all confident. According to the report, “nearly half of workers without a retirement plan were not at all confident about their financial security in retirement, compared with only about 1 in 10 with a plan.”

Additionally, a third of those surveyed are either not at all confident or not too confident that they are doing a good job preparing financially for retirement. Just over a third indicated that they “have virtually no savings and investments” and that the reason for the lack of savings was one’s cost of living and day-to-day expenses.

Although most everyone receives Social Security in retirement, the maximum payout is only $2,685 if you retire at age 66 in 2015. This amount is not enough to maintain the lifestyle that most would like in retirement. With this in mind, each of us needs to develop a plan to supplement our anticipated Social Security income.

Employer-provided retirement savings plans – including defined benefit plans and defined contribution plans – are a key component of our nation’s retirement system. The employer-sponsored retirement plan system has introduced tens of millions of American workers to retirement saving. Employers voluntarily establish and promote these plans to help their workers build assets for a secure retirement. Together with Social Security and individual savings, these plans produce significant retirement benefits for America’s working families.

American workers can also save for their retirements in a tax-deductible IRA. According to the IRA Investor Database, a data collection effort by the Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA), IRAs are used by working age Americans across all income levels.

No matter what your age, it is never too late to start planning for your retirement:
• Make the most of tax-advantaged plans: if your employer matches contributions, contribute at least the matching amount, and more if allowed.
• Explore other options: if you’ve maxed out your employer-sponsored plan, you may be eligible for other plans, such as traditional IRA and/or Roth IRA.
• Find money to save: make lifestyle adjustments to cut back on spending. Invest the savings into your retirement.
• Invest appropriately: while stocks come with greater risk, they may also produce higher returns. Work with your investment professional to determine an investment strategy that you are comfortable with.
• Monitor your progress: check in on your savings progress at least once a year and make adjustments as necessary.

One of the most important aspects of developing an appropriate strategy is to consult an investment or financial professional with the experience to provide guidance on the best way for you to invest for your retirement.

The brokerage industry is made up of roughly 380,000 financial advisors who work to serve over 58 million American households. That’s half the households in America. These financial advisors serve clients throughout their communities, who rely on them for guidance when making important decisions about their financial future.

You can take control of your retirement strategy by working in partnership with your investment or financial professional to:
• Identify how much you need to save.
• Understand what expenses you need to anticipate.
• Address potential obstacles that may arise and prepare for the unexpected.
• Identify key risks and take steps to mitigate them.
• Build a solid financial foundation.

Every little bit of saving for retirement can help prepare for a more secure retirement. Let’s look at one such example. Let’s assume that you open a retirement account with $100. Suppose you go out to lunch on average five times per week spending $10 per lunch. Instead of going out five times a week, reduce your lunch outings to three per week and take the $20 saved and invest it into your retirement account. If you have 40 years before you retire, and your retirement account gets a five percent return compounded once per year, and the retirement account will have saved $126,340.60 when you are ready to retire. And that amount is just from not spending an extra $86.67 per month on eating out for lunch! This is just a small portion of your overall retirement needs, but with one simple action, you have added a significant amount to your overall retirement package.

Many considerations need to be taken into account in order to develop an effective retirement strategy that ensures maintaining a basic standard of living. No matter what your retirement goal is, having a strategy to get there is critical. Developing that strategy to prepare for retirement is a critically important step that all of us should take today.

LEAVE A REPLY