As I get settled in at the office each morning I typically enjoy a cup of coffee while rummaging my way through emails and news articles I find of interest. This morning, I just happened to read two articles related to savings rates. I am sure there are very few of you out there that have not been made aware of the problems we face as a nation in dealing with retirements savings (or more appropriately put, a lack there of). While this very topic can be a depressing issue to tackle (for those with no savings set aside), it also can be a great motivator. The first step is to remove the blinders. Most of us know we have not saved enough. Then again, most of us without enough savings do little to change our current condition. Ignorance is bliss. We just know something magical is going to happen to us between now and the year we hit 65 (i.e. lottery, huge promotion/pay raise, etc.). Chances are, not a single reader of this blog post will hit the lottery in their lifetime. And if we don’t develop good savings habits now, we probably won’t as our earnings increase over time. Most of us will find that our living expenses somehow tend to increase step for step with our income. In other words, we spend what we make.

The bottom line here is, we, as individuals, need to take responsibility for our own retirement. G.E. Miller, in his article, “ The Current State of Retirement for Gen X & Y ,” lays out reasons why a cushy retirement for everyone is no longer the norm:

1. Pensions are a thing of the past - while many in generations past could rely on a decent pension (payable for life) when they retired at 55 or 60 years old, most companies now have found the associated costs with this type of retirement fund are just not feasible. If you’re lucky, you’ll receive a company match into your 401(k).

2. Inheritance – forget about it. Your parents spent all their money “giving you a better life than they had growing up.”

3. Social Security – There are those who argue it will be around forever, and there are those who argue it will disappear entirely. The fact remains that it is largely underfunded. While it may be around for years to come, chances of drastic cuts to future benefits are real. I wouldn’t recommend that anyone blindly rely on Social Security to be there as your sole source of retirement income.

To further complicate matter, we are living longer than ever. While this in itself is a wonderful thing, it means more years of retirement to pay for. Your retirement story can have a happy ending, but YOU have to make it happen. The earlier you start, and the more you save, the greater your chances for a fully-funded happy retirement. Speaking of happy, read, “ Is Saving the Key to Happiness ?” A recent study suggests that the size of your income may have its limits in increasing your level of happiness but those with a large savings account are both healthier and happy then those without.

The bottom line is, if you don’t take responsibility for saving for your retirement, who will? If you haven’t yet begun to save, the time to start is now. If you’re already saving for your retirement, don’t stop!! Keep going!!

If you have any questions regarding retirement savings or would like some help planning for retirement, contact our office.

Stephen Osborne
Accountant
sosborne@mo-cpa.com