Retirement: Can It Ever Happen for Me? | MoneyStrands

It’s easy to think that because retirement is a LONG way off, that it’s something you will deal with later.

Let me tell you now: this is a big mistake.

I don’t mean to startle you, but as you get older, time seems to pass more quickly – having spent your childhood in the unending wait for the next milestone, your 30s and 40s seem to be nothing but back-to-back birthdays.

Before you know it, you’re playing catch up and your retirement fund isn’t quite as healthy as it should be.

Many young people nowadays consider it a waste of their time to put money away in preparation for their retirement. People live for so much longer now than ever before, and as the population ages and people die later and later, the pot of state money that we pay into may well not exist by the time we come to need it.

Systems in place currently are in desperate need of an update.

65 used to be the age at which it made sense to hang up the overalls and relax, but today, not only are most 65-year-olds more in shape than a lot of millennials, retiring at that age may mean spending 30% of your adult life as a pensioner, which apart from being a big drain on government funding, ultimately, depending on the person, might not be necessary.

Moves have already been made in the US to up retirement age to 67, and European countries are following suit, upping the cut-off age to between 68 and 70.


An Ageing Population – Old News


In the UK alone, life expectancy increases by an incredible 5 hours a day, and by 2040, 1 in 7 people will be over 75.

Statistics show that the average 35-year old will need to have saved in advance of $600,000 to cover their retirement comfortably, but that the average 30-something has something in the ball park of 14,000 in the bank, if anything. People are facing serious poverty in their older years and something drastic needs to be done about it.

Oftentimes, the older you are, the less money you receive, so there are incentives been given to those who delay retirement as much as possible. The National Academy of Social Insurance in the US says: “An individual reaching the full-benefit age in 2015 (66 years old) receives an additional 8 percent benefit for each year he or she delays collecting benefits. If he or she delays taking benefits until age 70, the benefit will be 32 percent higher because of that delay”.


So how much should I be saving?


According to USA Today: If you start saving $300 a month at age 25, invest your savings, and generate an average annual return of 8% (which is more than doable with a stock-heavy portfolio), by age 65, you’ll have over $932,000 to fund your retirement.

Increase that $300 to $400 a month, and you’ll have over $1.2 million. But if you wait 10 years to start saving that $300 each month, you’ll have just $408,000 by age 65 — a reasonably impressive figure, but less than half of what you would have accumulated had you started saving right away.”

Something to bear in mind when considering how much to save, and when to do it. As state pensions dwindle, you need to cover yourself to avoid difficulties further down the road.

The long and the short of it is, that if you want to avoid slaving away until well into your 60s and 70s, now’s the time to sort your finances out, once and for all. A little is a lot better than nothing at all, so budget now to see what you can feasibly pay into a pension fund. Talk to your boss or Human Resources representative at work about any pension schemes they might have. If you’re lucky they might have a 401(k) account in place to match your contributions and help you reach your goal earlier.

We want you to reach retirement in the best financial shape possible, so make a few changes now, and see how much better things look in just a few years!



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