Why is Saving for Retirement Important?
by Sasha Grabenstetter, Consumer Economics Educator with the University of Illinois Extension. You can follow her on Twitter @Pennies4Pigs.
In the past, companies felt they had a responsibility to their employees to help them save for retirement in the form of pensions. Now, more than ever before, individuals are asked to save much more for their own retirement future. Although Social Security provides some relief, it shouldn’t be the main source of your retirement funds.
No One Will Save for You, But You
Pensions are outdated, so it’s time to step it up and get in the game. Whether it’s in your employer’s 401(k), your Individual Retirement Account (IRA) or your pink piggy bank, if you don’t save money towards retirement for yourself, then who will? You have a decision to make. How do you want to live in retirement? Do you want to live comfortably or do you want to fight for every dollar? You can live like this or you can live like that. You get to decide, today!
Pay Yourself First
At the beginning of each month, take a portion of your paycheck and place it into your designated savings vehicle before anything else. After your savings is secure, then pay the rest of your bills. Whether it’s 1 percent or 10 percent – save something! If you have an employer-sponsored plan, make sure to contribute up to your employer match. Otherwise, you’re giving away free money. If you’re having a hard time to find ways to save, check out the step down method.
Every year the Social Security Administration releases their Social Security Basic Facts. Retired workers (meaning people who are retired now) on average receive a $1,294 monthly benefit. Almost a quarter of married couples and almost half of unmarried persons rely on Social Security for 90 percent or more of their income. Without any additional savings, your yearly income (today) would be $15,528, right below 133 percent of the federal poverty guideline for one person. This amount doesn’t take into account your taxes, food, housing, medical expenses or even fun! Retirement is a time in your life where you finally get to do all the things you want to do, but without saving for your future self, how will those goals and dreams be accomplished?
Saving may feel like a sacrifice today, but 30 years from now, you’ll be glad you put something aside for your future retirement.No one is going to save for your retirement but you, so why not pay yourself first each month? Social Security only provides a small retirement benefit and it’s not supposed to be your main source of income. Saving may be hard, but being broke is even harder. If you’re in need of some motivation, you don’t need to go any further than a mirror (or computer screen) to face future you today! Save for yourself today, tomorrow and every day until retirement comes.