New findings about a lack of retirement preparedness have some financial planning experts worried. As I closed in on 40, I began to wonder if I had really done enough to get my retirement savings in motion so it could snowball into $1 million by the time I’m 67. According to a recent article by Wall Street Cheat Sheet, the average American’s prospects for retirement look pretty bleak. In fact, the 2014 Retirement Confidence Survey cited by Wall Street Cheat Sheet shows a third of people surveyed had only $1,000 saved for retirement. Sixty-six percent those surveyed had no idea who much they even needed for retirement. I’ll admit to the fact that I only have a foggy idea of what I need based on various on-line retirement calculators. However, in the past few years I’ve made some moves to build up my confidence about my financial future. I am no longer panicking about whether or not I can have a comfortable retirement.
Saving a lot or a little
One of the mistakes I used to make is stopping my retirement savings when I had too many bills to pay. Now I know it’s better to save a little than nothing at all. When I’m having a bad year, I may decrease the percentage I save into my 401(k), but I don’t suspend my retirement savings. According to the study, people with retirement accounts are more confident than people without them. Even if I didn’t have a full-time job that offered a 401(k), I’d contribute to a Roth IRA. If I had no income at all, I’d use a spousal Roth IRA funded through my husband’s income.
Eliminating the debt factor
One of the main reasons retirees today don’t feel as though they have enough money in retirement is due to high personal debt. As I eliminate debt, I feel better about my current financial future as well as the future. According to the Wall Street Cheat Sheet, 24 percent of workers today and 17 percent of people who are already retired say they are in more debt now than 5 years ago.
Making a game out of it
To make it less daunting to financially prepare for retirement, I make a game out of it. I know how much money I need in my checking account each day to cover all my bills as well as cover discretionary purchases. Each day I make a challenge to stay below my budget. At the end of the day, I check my checking account balance. If I am $30 above where I need to be, I move that $30 over to savings with online banking. By the end of the month, the few dollars here and there adds up to several hundred that I can then move into my Roth IRA.
In addition to saving, I’m also focused on paying off my mortgage by the time I’m 50. I want to have plenty of years to save not only for retirement, but for home improvements to transform my house into a retirement home. I’m not a millionaire now, but I hope to be one at 67.
More from this contributor:
Overcoming Retirement Savings Burnout
I Pay Myself Last
Escaping a Lifetime of Debt