Over half of all employed American adults feel “a little” or “far” behind in their financial preparations for retirement, according to a new survey from TD Ameritrade. The most common explanation? Respondents said they simply have no money left to save after meeting their regular expenses or they started saving too late. Many parents also said the cost of raising children made it impossible to save for their retirement.
One solution available to most people is to be more proactive in managing cash flow. Various surveys I’ve conducted show that very few people use a budget, which I consider to be the single most powerful personal finance tool. Here’s a simple how-to guide for getting started with a budget.
Another solution is to estimate how much you should be saving for your retirement. Research has shown that those who take this step are much more likely to feel confident about their ability to adequately fund their retirement, and in fact, have more in retirement savings than those who have not estimated their needs. A simple way to run the numbers is to use Fidelity’s myPlan Snapshot or myPlan Retirement Quick Check online calculators. The Snapshot requires answers to just five questions. The Quick Check is a more thorough analysis, but still only takes about 30 minutes to complete.
Have you estimated your retirement needs? Are you on track toward the accomplishment of your retirement goals? Have you made any changes in how you are investing due to the recession?
Stephen – I feel your pain. The stock market has been tough to stomach of late.
There are basically two ways to invest, in my opinion. There’s the do-it-yourself method, which I believe is best done relying on timeless investing principles. They include: diversify (mutual funds); get the asset allocation right for your age and goals (arguably the most important factor for long-term investment success) by using an asset allocation calculator and choosing funds accordingly; and stay in the game (no one can predict the market). The simplest way to put such principles into practice is to invest a set amount every month in a target-date fund. The other approach is to rely on a trusted investment advisor. You can find one who is well-schooled in financial matters and knowledgeable about biblical principles through http://www.kingdomadvisors.org.
Obviously, there’s much more to cover. I’m planning to write more about investing in the weeks ahead.
Matt, I feel way behind on my retirement planning, but its because I’m trying to fill a bucket filled with holes!!!! Where in the world to put money nowadays? The stock market has been a loss for 11 years now. Bonds are going to be a losing proposition once inflation kicks in from the lunacy in Washington. I don’t trust gold—-I think its a Ponzi scheme.
Where do you trust your retirement money to give you a return these days?