The Federal Reserve Bank just released statistics regarding retirement savings for those approaching age 65. The average amount people have saved is just $14,500, and to add insult to injury, the statistics show that one-third of all households have no retirement savings whatsoever.
What can a person do to better to prepare for retirement? I offer the following, with some explanation:
- Build a spending plan and create a surplus each and every month for the rest of your life. In other words, quit overspending. Don’t try to just write down what you think you will spend, but review all spending for the last 12 months and know for a certainty where your money has gone. Then use this information to forecast your spending now and then track how you spend. This will create a surplus that you can use to forecast retirement.
- Do not try to “wing-it” and hope for the best. This has never worked for anyone!
- Consider working part-time for many years into retirement so that you can afford health care and some of the extras you may want during retirement.
- Keep your money safe, but keep it working for you. Remember that people are living much longer than ever before. Consider using the newly designed fixed-indexed annuities that guarantee no loss of principal, yet have averaged 5 percent growth over the last 10 years.
- Learn how to do tax planning. Rate-of-return is no longer the best approach — it is tax planning that will make a huge difference in the income you have to live on.
- Stay healthy by eating right and exercising five times a week. Okay, you may think I have no business giving such advice, but it has saved me, now in my mid 70’s, lots of money that I have available for me and not for a long-term care facility. Simple walking will work wonders. Health care costs can eat away at your savings very quickly. We don’t always control our own health issues, but we can do what we know we should — doing so has personally blessed my life.
- Do not allow your grown children to draw down your savings. Parents are tempted, but this can set a bad trend that children will come to expect. A client of mine recently purchased an apron and cut off its strings, then put these into a gift for her son graduating from high school. Her message was very clear. Hope you will get the same one.