Katie Lobosco, writing for CNN about retirement, wonders if she’ll ever be able to retire like her grandmother did. She laments, “I won’t be getting a pension, let alone two, and I won’t be able to get my full Social Security benefits as early as Grandma did. There’s a chance I won’t receive as much. I’ll be relying on my own savings — big time.”
This is the predicament in which many younger savers find themselves. It’s also something I talk with clients about every day. The retirement landscape is changing. People aren’t going into retirement expecting the normal “cliff” retirement. This is where you just stop working at 65 and never work again. Instead, many want a more gradual approach. This is sometimes due to personal choice, but other times it’s because the extra income is needed for a few more years.
In any event, retirement planning can be a challenge, especially for young people. Lobosco goes on to explain that “Almost 70% of college grads now leave school with some student debt” and that “Just 14% of private sector workers receive pensions now, compared to more than 30% a few decades ago.” Adding to all of this, she rightly notes that life-expectancy has increased for younger generations of savers.
But, according to her own calculations, there is some hope:
Right now I set aside 13% of my income each year for retirement. But I plan on contributing more than that in the future. If I wanted to replace more of my income, I could start saving 21% now and retire at 67 with 85% of my pre-retirement income. If I believe Social Security will be reduced, I could start saving 19% of my income now and still be able to retire by 70. Read the full story…
The take-away here is what I regularly talk with clients about: save, save, save! And, start saving early. If one can live below one’s means, save, and invest those savings, one can build enough wealth for retirement. It’s really rather simple, but unfortunately it’s not always easy.
If you have any questions on ways to save please contact the fee only planners at Dunston Financial Group (720) 503-3357.