Does Your 401k Need Help?
Most Americans rely on individual 401k plans for the bulk of their retirement. A serious problem with 401K plans is the investor's reliance on employer matching for the plan. This may cause an employee to rely too much on the employer and not contribute enough to savings. But, if you have not taken a serious look at retirement planning yet, nothing will give you a wake up call like using one of the many retirement calculators available on the internet. Retirement planning, which is essential for every adult, certainly is a difficult task and shouldn't be taken lightly.
Even when you use a professional adviser, the financial planning process can be difficult. There are just so many variable to consider: the age at which you retire, the age at which you start saving money, and the amount you save for retirement are just a few considerations.
Government inflation of the money supply also means you have to account for inflation. That can be hard to do. There are many retirement calculators on the internet to help you though. What most of the calculators will show you, however, is that Social Security - for the most part - will not cover very much of your retirement. You will have to save a lot more money to have even a semi-comfortable retirement.
The economy will probably recover, and continue to grow. However with inflation at anywhere between three and five percent, you are going to be gaining and losing value in your investments based on how much your savings is being eroded.
Your parents and grandparents may have grown up in a time when a $50 a week wage was normal. Now, however, that's completely unrealistic. More than 50 years later, there is no way you could expect to live off $200 a week.
Average Americans making $500 to $1,000 per week today will see the same kind of results that their parents and grandparents are seeing now, unfortunately. The retirement calculators are showing that they should have a retirement nest egg of close to a million bucks if they want to retire comfortably for 20-30 years.
One calculator tested online showed that an adult starting with an assets of $100,000 and adding $4,000 year to that nest egg would enter retirement with almost $900,000 but still be bankrupt by 85.
Part of managing your income is setting aside savings and investing a part of it (note, not ALL of it) for your future. Even though it's difficult to forecast the future, it is necessary due to the nature of human beings and the requirement of long-range planning. There is a wealth of assistance available on the internet to get you started, and professional advisors ready to help when needed.
Even when you use a professional adviser, the financial planning process can be difficult. There are just so many variable to consider: the age at which you retire, the age at which you start saving money, and the amount you save for retirement are just a few considerations.
Government inflation of the money supply also means you have to account for inflation. That can be hard to do. There are many retirement calculators on the internet to help you though. What most of the calculators will show you, however, is that Social Security - for the most part - will not cover very much of your retirement. You will have to save a lot more money to have even a semi-comfortable retirement.
The economy will probably recover, and continue to grow. However with inflation at anywhere between three and five percent, you are going to be gaining and losing value in your investments based on how much your savings is being eroded.
Your parents and grandparents may have grown up in a time when a $50 a week wage was normal. Now, however, that's completely unrealistic. More than 50 years later, there is no way you could expect to live off $200 a week.
Average Americans making $500 to $1,000 per week today will see the same kind of results that their parents and grandparents are seeing now, unfortunately. The retirement calculators are showing that they should have a retirement nest egg of close to a million bucks if they want to retire comfortably for 20-30 years.
One calculator tested online showed that an adult starting with an assets of $100,000 and adding $4,000 year to that nest egg would enter retirement with almost $900,000 but still be bankrupt by 85.
Part of managing your income is setting aside savings and investing a part of it (note, not ALL of it) for your future. Even though it's difficult to forecast the future, it is necessary due to the nature of human beings and the requirement of long-range planning. There is a wealth of assistance available on the internet to get you started, and professional advisors ready to help when needed.
About the Author:
Author: David Lewis, RFA is a professional financial adviser. If you would like more detailed information about any aspect of personal finance, please visit David's website.
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4:21 PM
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