There appears to be a new reality forming for the average American looking to retire.
For decades, we've seen our citizens fully retiring in their 60s and living comfortably for the remainder of their lives. However, with the economy still ailing from many financial problems, with Americans’ saving rates still among the lowest in the world, and with our incomes actually decreasing with inflation over the last decade, it appears that your average American may not be able to fully retire as soon as we thought possible.
Recent studies show that more than 60 percent of the population has less than $25,000 of savings and 29 percent have less than $1,000. It seems nearly impossible to even begin planning on any type of retirement, let alone a full retirement.
If you look at these figures and can relate, let's start with an easy solution: begin saving more today. Don't wait until tomorrow, start right now.
If your company offers a retirement plan, sign up. Start by contributing as much as the company is willing to match. If there is no match, just start with something, anything.
If there is no plan offered at your company, then look for a low-entry online site. There a few companies offering “no minimum” investments. Have them start taking $25 or $50 a month and begin investing.
Sit down with a financial planner. Have them give you some long-term options. Maybe you could look for a part-time job in your 60s. Ease your way into retirement -- this solution requires a lot less capital and, frankly, may be healthier for you in the long run.
Do some research on your Social Security fund. You have many options to choose from. The wrong one may cost you tens of thousands of dollars. There are many websites out there that will run an analysis on your situation and help you decide the optimal time to start collecting Social Security.
If you've already done all this, then you are way ahead of the game. What you need to do now is make sure your portfolio is protected.
Two main areas you should concern yourself with are taxes and market volatility.
There is no sure-fire way to protect from volatility other than just not being in the market. This is probably not a good solution.
There is a way to protect from taxes, which may become a big problem down the road as it becomes more and more difficult for the government to meet its expenses.
It may also become a concern if your fellow Americans don't start saving soon; they may need to be taken care of by someone.
Start looking at tax-free investment opportunities. If you pay your taxes on your retirement savings today, you may not have to pay them on the growth in the future. If you do this, then tax increases won't be a concern.
Retirement is the same as any other dream: It only becomes a reality once you start actively working for it. We can all do more to ensure we have a comfortable life.
Anybody can spend. It takes true genius to defer gratification and save.