National Financial Planning Month a good time to re-evaluate
TULSA, Okla. – In most American households, saving for the next “big ticket” purchase is always on the radar, whether it be a new home, a new car or even a television. More often than not, however, the retirement nest egg isn’t considered something that needs funding in the immediate future.
A survey by GoBankingRates this year revealed that one-third of Americans have no retirement account whatsoever. The poll included respondents from multiple generations - millennials, Gen Xers and baby boomers. Among those, 23 percent have saved less than $10,000 for retirement.
The National Institute on Retirement Savings (NIRS) affirms those findings, reporting that the “average working household has virtually no retirement savings” and households that are near retirement have a median savings of around $12,000. Because October is National Financial Planning Month, it is a good time for households to review retirement objectives and plans.
“Often times, consumers think that saving for the biggest investment of their life, retirement, means that they must give up the dreams of today or that they can worry about it later and start saving down the road,” Arvest Wealth Management Regional Investment Officer Jennifer Hawkins said. “The key is getting an early start and having a strategic plan. Saving sooner rather than later and working with a financial advisor that you trust to maximize growth with the least amount of risk. Taking these simple steps will mean less stress as you near retirement.”
For those who have not started saving, Hawkins advises to:
· Start saving immediately
· Begin by outlining a budget of mandatory expenses
· Determine how much free cash flow can be set back, even if it’s only 2 percent of your income
· Enroll in employer-sponsored retirement plans, especially those in which your employer matches part, or all, of your contribution. Not doing so is leaving free money on the table.
· Invest a percentage of pay raises, tax refunds and other financial gains into retirement savings
· Set a goal of saving 70 to 80 percent of annual pre-tax income for every year you will be retired
· Diversify savings between 401(k), equities, bonds, traditional savings, etc.
For those who have begun saving:
· Re-evaluate savings goals and objectives
· Diversify savings options
· Determine the financial requirements for your personal retirement lifestyle
· Seek advice from a financial advisor to help define and maximize asset allocation and risk assessment, as well as to update goals periodically.
It’s not uncommon for retirees to be faced with various unexpected expenses during their “golden years,” most of which are the result of poor retirement planning or misguided spending expectations for which they didn’t anticipate earlier in life.
“Social Security income is simply not enough for most people,” Hawkins said. “Once you are using retirement, unexpected expenses and income gaps are nearly impossible to fill.”
Hawkins says those financial hurdles can be avoided with a well-planned retirement goal and a savings strategy that begins as early as possible, when earning is at its peak and savings should be as well.