A new survey shows 55 percent of people fear they won’t have enough in retirement. I used to be afraid that I’d retire broke. Experts say some people simply give up because they are so consumed with fear and disappointment about their future. They rather live in the moment. I overcame my retirement savings shortfalls by setting realistic savings targets and making savings automatic so I no longer have to think about it again. Hopefully, I won’t have to think about it ever. According to a recent USA Today piece, people fear going broke in retirement more than losing their job or gaining weight. The article cited a Bank of America Merrill Edge report on the emerging affluent with $50,000 to $250,000 in investments and savings not including real estate.
Setting a realistic savings goal
My first step was to figure out a more realistic percentage I could have taken out of my paycheck and put into my 401(k). I decided to make an important change by switching from investing in a regular 401(k) to a Roth 401(k). I decided to invest 5 percent for retirement this year, but will have 1 percent more taken out next year and the following years until I reach my 15 percent savings target. My brokerage firm will automatically make the adjustments for me unless I tell them otherwise due to unforeseen financial situations.
Keeping my age in cash
I used to invest all of my retirement money in cash thinking I won’t actually retire for another 30 years. Now I realize that I might be forced into early retirement and unable to find a job that allows me to save as much for retirement. After watching dozens of friends and neighbors get laid off from their jobs, I don’t take my income for granted. I review my elections in my 401(k) each year. I keep at least my age in a money market account in case the market crashes. I also have a goal to save my age multiplied by 1,000 in a savings account. By the time I reach age 50, I want to have $50,000 in an emergency savings account. I still have a long way to go.
Becoming a home body
According to the USA Today article, 33 percent of those surveyed refused to cut back on entertainment in order to save for retirement. Twenty-eight percent wouldn’t give up vacations. Thirty-percent wouldn’t even reduce the number of times they eat out. I find it surprising that 63 percent had the priority to “live in the moment.” As a parent, I think about the long term. Even if I die tomorrow, I want to be financially responsible so my children have something when I’m gone. By hanging out at home, I save tens of thousands of dollars. I have inexpensive hobbies such as gardening, investing in stocks and cooking.
I think I can still enjoy life in the moment and also save for retirement. I think the key to living without worries is to do something constructive to prevent financial problems in the future. I took a few easy steps to safeguard my retirement future.
More from this contributor:
I’m Not Retiring until my 80s
It’s Not My Fault I’m Not Saving Enough
We Stopped Paying the Grandparents Debts