In this current situation almost everyone is worse-off: recent graduates, who can’t find job, middle-aged people being laid-off, even the older generation that cannot leave their jobs and retire as planned.
In order to learn from the older generation’s mistakes, you should start saving for retirement as early as you can and save regularly. The dollar that you did not save in your 20s becomes $8 you have to save if you start saving in 50s. When you are just starting to acquire the basic fixed assets such as home, car, or are paying of student loans, it is fine to save only 3% of income, but as time goes on you should progressively increase the share of income you are putting aside to about 10-12% which is the optimal desirable amount.
If, however, you procrastinate saving early, it is not too late to start saving 15 years before your retirement. At this moment you should establish a financial plan for saving and retiring, gradually get rid of any debts, and try to pay off your mortgage. According to CNNMoney, one should aim for 80% of their income before taxes for heir retirement income to maintain the same level of life. Everyone is unique and everyone has their own “dream” retirement vision, so adjust your savings not only according to your income but also to your desired lifestyle after retirement. Always have a cushion, i.e. save more than average for your income level, just to be on the safe side.
When you are very close to your retirement, try to use up your benefits provided by your employer and take the vacation days you haven’t taken either as cash or a nice break. Decide on how you will withdraw your savings, sign up for Social Security and Medicare and then start enjoying your retirement.
References:
http://www.chicagotribune.com/business/yourmoney/chi-tc-biz-ym-started-1004oct04,0,7403517.story
http://www.hometownannapolis.com/news/bus/2009/10/04-29/Ways-to-prepare-early-for-your-retirement.html
http://money.cnn.com/2009/10/08/pf/expert/retirement_incom.moneymag/index.htm?postversion=2009100810
I think this is hard to achieve but if everyone put their minds into it I am sure we can all do it. Even though we are in difficult time now, I believe that the economy will get back on track in a couple years. It's going to be a long time until we retire so I wouldn't stress too much.
ReplyDeleteQuang Nguyen