How To Overcome Your Retirement Blues
from daveramsey.com on 24 Jun 2010
Americans’ confidence in being able to afford a comfortable retirement is at an all-time low. Since there’s nothing like discouragement to keep us from moving ahead, let’s see what’s behind this attitude and find ways to overcome it.
Debt Causes Discouragement
The 2010 Retirement Confidence Survey says nearly 80% of workers who have not saved anything for retirement say they can’t afford it. That’s not surprising since most Americans live paycheck to paycheck. There’s no money to invest for retirement because it’s all going to payments—school loan payments, car loan payments, credit card payments.
Learn From the Wealthy
According to three-fourths of the people on Forbes’ list of the wealthiest people in America, getting and staying debt-free is the most important thing you can do to build wealth. Once you’re debt-free, you can use your income—your number-one wealth building tool—to build up your emergency fund and invest for retirement.
Step 1 – Set a Retirement Goal
People who have set a retirement savings goal are more likely to save for retirement, according to the survey. That makes sense because when people set a goal, something inside their brain clicks. They are compelled to take action to reach that goal.
The study also said investors who know how much they will need for retirement are more likely to enroll in a 401(k) and often invest more than people who’re just guessing at what they’ll need. A professional investment advisor can help you figure out your retirement savings needs and help you make a plan. We can help you find a trustworthy advisor who Dave recommends in your area.
Step 2 – Take Simple Steps Toward a Great Retirement
If you invest 15% of your income like Dave suggests, your retirement picture can be bright—even if you only have 20 years until retirement.
Median income: $40,000 x 15% = $500/month to invest
Invest 3% in 401(k): $100/month + 3% employer match ($100) = $200/month
Remaining $400/month in Roth IRA
In 20 years:
401(k) earning 12% will be worth: $199,000
Roth IRA earning 12% will be worth: $399,000
= $598,000 for retirement
Not bad, right? But what if you just kicked another $100 a month into your 401(k)? You boost your savings by more than $100,000. If you delay retirement for three years, you’ll have $1 million!
Don’t let discouragement get in the way of progress! If you have debt, get out of it! Then, work with a professional to set your retirement goal and make a plan.