By Kirk Larson
Social Security Western Washington Public Affairs Specialist
There is an old saying, “If you fail to plan, you plan to fail.” That is very true when you start to consider retirement. The 2014 Annual National Survey Assessing Household Savings (released during America Saves Week) revealed that while most Americans are meeting immediate financial needs, they are worse off than several years ago.
• Only about one-third of Americans feel prepared for their long term financial future.
• 68 percent reported that they are spending less than their income and saving the difference. Down from 73 Percent in 2010.
• Nearly two-thirds of respondents (64%) said that they “have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.” Down from 71 percent in 2010.
• 76 percent said that they are reducing their consumer debt, or are consumer debt-free. Down from 79 percent in 2010.
If you haven’t begun saving for retirement, now is a good time to start—no matter what your age. If retirement is near, you’ll want to jump into the fast lane right away. If you’re younger and retirement seems a lifetime away, it’s still in your best interest to begin saving now. Here’s how much the magic of compound interest will work to your advantage. For example, a 25-year old who begins saving $100 a month and earns a modest 5 percent interest will have more than $150,000 at age 65. Experts agree that saving when you’re young will make a world of difference when the time comes to draw on your retirement savings.
Don’t just take our word for it. You can check out the numbers yourself. A great way to start figuring out how much you will need for retirement is to use Social Security’s online Retirement Estimator, which offers an instant and personalized estimate of your future Social Security retirement benefits based on your earnings record. Try it today at www.socialsecurity.gov/estimator.
We encourage saving for retirement, but there are reasons to save for every stage of life. A great place to go for help is www.mymoney.gov (the official U.S. government's website dedicated to teaching Americans the basics of finances.) Whether you are looking for information about buying a home, balancing your checkbook, or investing in your 401(k) plan, the resources on www.mymoney.gov can help you.
The Ballpark Estimator at www.choosetosave.org/ballpark is another excellent online tool. It makes complicated issues, like projected Social Security benefits and earnings assumptions on savings, easy to understand.
If you have to choose between scrubbing down the house or scrubbing your budget to get your financial house in order, we recommend putting off the cleaning one more day. But don’t put off planning your future right now at www.socialsecurity.gov and don’t arrive at retirement unprepared.