Small Changes Make a Big Impact

Small Changes Make a Big Impact

Small Changes Make a Big Impact

Most of us overlook how important it is to save for retirement, we get caught up in living right now.  We have short term goals like the next vacation or buying a new car, paying for our kids college education but you still need a long term plan.  Starting early and saving regularly can lead to a significant amount of money for your retirement.  If you start early then your money has decades to grow before you have to tap into it.  Let us show you how small changes can make a big impact.

Start with a dollar per day

You can start out with a simple goal of saving one dollar per day, that isn’t even the cost of subway fare or a cup of coffee and it is an easy manageable amount.  Now, if you take your dollar a day and at the end of the year you’re going to have $365.  Invest that money into modest account that pays just a 7% return and with compound interest over 30 years you will have just over $70,000.  That’s well worth the effort it takes you to put away just a dollar a day.

Increase your savings by a tiny amount

Forget about doubling the amount you try and save or put into a retirement account, most of us don’t have the cash or the discipline.  What you can do instead is increase your saving by just one or two percent.  If you’re currently putting aside just five percent of your income towards your retirement and you start out with a job that pays you a modest $30,000 per year, you get the average cost of living increase every year of about three percent.  With five percent of your income going into an investment account and a seven percent return you would have somewhere around $208,000 after thirty years.

Now if instead you opt to change the amount you contribute to your retirement account from five to six percent.  With the same annual interest rates at the end of thirty years, now you are looking at more than $250,000.  That small one percent contribution, with the magic of compound interest gives almost 20% more money when you are ready to retire.

It is never too late

No matter how little you think that contribution is in the end it can add up significantly over time.  Patience and persistence are excellent qualities when it comes to retirement savings.  But it is never too late to get started.  Even if retirement is closer than you think it is time to start thinking about your financial future and where you want to be, come age 65.  The most important thing you can do is to get started.

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You Need to Start Preparing for Retirement Now

You Need to Start Preparing for Retirement Now

Retirement is not as far away as we like to think, and many Americans are completely unready for the day that they finally stop working.  The high cost of living makes it more important for you to begin start saving as soon as possible.  Studies show that despite the availability of 401k’s, more than four out of ten Americans don’t have a pension or long term savings.  Here are some compelling reasons you need to start preparing for retirement now.

We live longer after retirement

Around the time the baby boomer generation was born the average life expectancy was about 68 years old, today we are living on average to 79 years old.  This impacts your retirement savings because you’re going to need more money to support yourself for longer.  If you want to retire early and enjoy those extra years without working you need to save for an additional thirty years of living after you stop working.

Social Security may not be enough

On average social security only gives you about $16,000 a year to live on, and for most Americans this is nowhere near enough to live on.  You are not eligible to collect social security until you reach the age of 62 so you can forget about retiring early.  That means you are going to have to live on your own savings until social security kicks in and then continue to supplement that income.  Here is why social security won’t be enough.

The rising costs of health care

One of the reasons that we are living longer is due to our access to healthcare, however that comes at a price.  Aside from the regular costs of living such as rent/mortgage payments, food, clothing, and entertainment you are also faced with increasing health care costs.  You can expect to pay $600 per month on average on just routine healthcare and as you age that cost goes up.

You should be able to enjoy life

Most of the negatives that come with retirement are due to lack of funds, and that is from poor planning for retirement.  With a good retirement plan you can live the life you want when you retire.  Whether you want to spend those years traveling or gardening in your backyard you need a solid plan.  Retirement planning is critical to  your overall financial health and there is no better time to start than now.  Talk with your bank or financial planner to get started.

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