Is Your 401k Plan Going To Be Enough?
401ks are a popular tool used for retirement planning. One of a few problems with 401k pans is the investor's reliance on employer matching for the plan. This may cause an employee to rely too much on the employer and not contribute enough to savings. Most Americans have no idea how much money they should be saving. If you have never used one, a retirement calculator will probably leave your jaw on the floor in amazement. Planning for retirement is a difficult task and shouldn't be taken lightly.
Even when you use a professional adviser, the financial planning process can be difficult. There are just so many variable to consider: how much your retirement savings earn over the years and into retirement, how much debt you have, if any, at the age you plan to retire, and the quality of your health entering retirement are just a few considerations.
You also need a way to account for fiscal irresponsibility on the part of Government (i.e. inflation) and what that will do to your retirement savings. On the internet there are dozens of retirement calculators available, sponsored by retirement organizations, investment companies and other businesses in the money management business that can help you do this. What most of the calculators will show you, is that for most people, even relying on Social Security, you will need a lot of retirement savings to maintain a near pre - retirement standard of living.
The economy will probably recover, and continue to grow. However with inflation at anywhere between three and five percent, you are going to be gaining and losing value in your investments based on how much your savings is being eroded.
Years ago our parents and grandparents, grew up in a time when a $50 a week wage was respectable income, and even during mid life that respectable income had quadrupled to $200 a week. But now, more than 50 years later, it would be foolish to expect to be able to live off $200 a week, and the $50 a week income is minor in today's economy.
Average Americans making $500 to $1,000 per week today will see the same kind of results that their parents and grandparents are seeing now, unfortunately. The retirement calculators are showing that they should have a retirement nest egg of close to a million bucks if they want to retire comfortably for 20-30 years.
One calculator tested online showed that an adult starting with an assets of $100,000 and adding $4,000 year to that nest egg would enter retirement with almost $900,000 but still be bankrupt by 85.
Part of managing your existing income is being able to save money and still having access to it when you need it (sometimes hard to do inside a 401K), and still being able to invest for your retirement (though here, a tax deferral helps). Estimating your retirement income and expenses can be extremely difficult, however, there are many different sources of information and assistance available on the internet to get you started.
Even when you use a professional adviser, the financial planning process can be difficult. There are just so many variable to consider: how much your retirement savings earn over the years and into retirement, how much debt you have, if any, at the age you plan to retire, and the quality of your health entering retirement are just a few considerations.
You also need a way to account for fiscal irresponsibility on the part of Government (i.e. inflation) and what that will do to your retirement savings. On the internet there are dozens of retirement calculators available, sponsored by retirement organizations, investment companies and other businesses in the money management business that can help you do this. What most of the calculators will show you, is that for most people, even relying on Social Security, you will need a lot of retirement savings to maintain a near pre - retirement standard of living.
The economy will probably recover, and continue to grow. However with inflation at anywhere between three and five percent, you are going to be gaining and losing value in your investments based on how much your savings is being eroded.
Years ago our parents and grandparents, grew up in a time when a $50 a week wage was respectable income, and even during mid life that respectable income had quadrupled to $200 a week. But now, more than 50 years later, it would be foolish to expect to be able to live off $200 a week, and the $50 a week income is minor in today's economy.
Average Americans making $500 to $1,000 per week today will see the same kind of results that their parents and grandparents are seeing now, unfortunately. The retirement calculators are showing that they should have a retirement nest egg of close to a million bucks if they want to retire comfortably for 20-30 years.
One calculator tested online showed that an adult starting with an assets of $100,000 and adding $4,000 year to that nest egg would enter retirement with almost $900,000 but still be bankrupt by 85.
Part of managing your existing income is being able to save money and still having access to it when you need it (sometimes hard to do inside a 401K), and still being able to invest for your retirement (though here, a tax deferral helps). Estimating your retirement income and expenses can be extremely difficult, however, there are many different sources of information and assistance available on the internet to get you started.
About the Author:
There is only so much information that can be covered in one article. If you would like more detailed information about any aspect of personal finance, please visit David's website.
posted by Debt Consolidation Loan at
11:20 PM
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