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Retirement, investments, financial planning for every stage of life—learn about it all here at Invested,
a blog from your Wealth Management Advisors at Kirtland Financial Services.

6 Telltale Signs You’re Not Saving Enough for Retirement

By Kirtland Financial Services

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As a young person, you imagine you have all the time in the world to save for retirement. You live in the present with the future a mere blip out on the horizon. But time has a way of flying by, and you realize that maybe you are not saving nearly enough for retirement as you initially planned, nor will you be able to live the life after retirement you have always envisioned.

How can you be sure if you need to save more? Consider these six telltale signs to help you decide if today is the day you need to change your saving strategy.

1. You don't have a budget

You might be surprised how many people don’t manage their finances with the help of a budget. Over the years, you may have felt that you don’t earn enough money to warrant keeping a budget. However, that is when having a budget could be the most beneficial. Determining how much you have to put away toward a savings strategy requires knowing how much you bring in versus how much has to go out toward expenses.

2. You are drowning in debt

Generally, if the majority of the money you spend goes toward paying off your debt, there is a good chance not enough goes toward your savings. Personal finance expert and author Nathan W. Morris said, “Every time you borrow money, you’re robbing your future self.”

3. You are frivolously spending money that could go toward savings

Life today is far different from that of our parents or grandparents. There is much more to spend money on, and the cost of living is increasing faster than wages. The result is families that often find themselves living paycheck to paycheck and putting off their retirement savings. Instead of spending money on five television apps, pick one and cancel the rest. Instead of eating out four days a week, eat out twice a week and put the money you save cooking at home toward your savings.

4. You live above your means

Living above your means is easy. Life today is expensive, and people want to have fun with toys and new gadgets, eat at popular restaurants, dress in trendy clothes, and travel to exotic locations—and it all costs money. 

5. You have put off creating a savings plan

“I’ll start saving next paycheck.” Do you remember the first time you said that? Maybe years went by before you truly decided to save and then created a savings plan. However, perhaps you only saved briefly until the motivation wore off and you slid back into your old habits. What have you saved up, and how far do you have to go to feel relatively comfortable that you can retire as planned? Work out a savings plan where you are striving toward a specific number. A financial professional can help you with investment ideas to address concerns about that number. There is a method called the 4% rule. The idea behind this rule is that you can spend about 4% of your savings each year in addition to a pension (if you get one) and Social Security benefits. For example, if you estimate you may have about $1.2 million saved by the year you retire, you would be looking at $48,000 (4% of $1,200,000) as the amount you could spend annually, helping to mitigate some of the risk of running out of money during retirement. There are no guarantees, it is just a benchmark to help guide you.

6. You are putting your money into a savings account with a low interest rate

Many a story about grandparents working their entire lives and saving up a ton of money by storing it under a mattress or in a crawl space has been fondly retold and romanticized, however, as fun and romantic as these stories are, they aren’t the most efficient way to save money. Some people take a percentage of their paycheck and put it into a savings account which may have a low interest rate. Instead consider a low-risk investment vehicle and aim at saving more over the span of your working years.

Rescue Your Retirement With a Financial Professional

It is never too late to start saving for retirement. The world of finance and the variety of strategies and investment opportunities available can be overwhelming and complex. A financial professional can work with you to design a plan and decide on manageable goals that work for you and your financial and retirement aspirations.

Sources:

Will Your Retirement Income Be Enough? (investopedia.com)

What Is The 4% Rule For Retirement Withdrawals? | Bankrate

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions

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