Many people make excuses about why they can’t save for retirement. But everyone should be tucking something away for a time when they can no longer work. Allow me to clear up these five misconceptions about saving for retirement.
1. Retirement is about being stingy and miserly. Saving for your retirement isn't a selfish act. In fact, I think it's probably one of the most selfless things you can do. Properly saving for retirement says that you care enough about your family and friends to not burden them with taking care of you in your post-earning years. If you properly save for retirement, then your family, church, or fellow tax payers won't be on the hook for your medical bills and living expenses once you can't work any more.
2. Retirement is a farce created by investment companies. I occasionally hear the comment that retirement is a concept trumped up by stock brokers and investment firms. They certainly use the idea of a comfortable retirement to promote their products, but that doesn't mean that they came up with the concept. Not being able to work and provide for yourself because of aging isn't a novel problem. We all grow old and reach a point when we can no longer work to put food on the table. We are an aging society that is also living longer. We all need to plan financially for this stage of our lives.
3. Retirement is for old people to worry about. The ability to save for retirement isn't exclusive to the older than 50 crowd. Young people can and should get started as soon as possible. In fact, the sooner you start saving, the easier it will be to afford your retirement. Regardless of your age, now is the time to start putting some money aside for retirement.
4. Social Security will take care of me in retirement. We spend our whole career paying into the Social Security trust fund. But it was never intended to be a total solution to funding your retirement. Many people wonder if they can even count on Social Security. I won't go as far as to say that Social Security won't be there for you, but I know that it should only be factored in as a small percentage of our retirement income. If you count on it to cover all of your expenses, you will be living very meagerly. The average Social Security monthly check in today's dollars is around $1,200.
5. Only high earners or the wealthy can afford retirement. If you can afford to live off of the income you currently bring in, then you can afford to save for a retirement that will allow you to maintain that lifestyle. Everyone can find ways to reduce their expenses or increase their income just enough to achieve a 5 to 10 percent cushion to use towards retirement savings.
Philip Taylor is the author of 104 Ways to Save Extra Money. Read his popular blog, PT Money: Personal Finance for more insightful money tips, like his recent suggestions for the best online checking accounts.