Unless you live under a rock, you are aware of the need to save for retirement.
The message is so common that it tends to fade into the background of “things I need to do someday”.
If it is common knowledge that it is necessary to save for retirement, why are so many people financially unprepared as retirement draws near?
In my humble, unprofessional, opinion, I think that even though everyone knows it’s important to save for retirement, they don’t really GET it.
What’s the difference between knowing and GETTING?
Experience. Consider this analogy.
Everyone knows it’s necessary to check and change the oil in a vehicle, and most people do it because they are aware of the potential negative consequences.
However, there are a few that tend to overlook, ignore, or simply procrastinate until the motor blows up.
Suddenly, they GET the importance of checking and changing the oil.
Experience has ensured that changing the oil will never again be ignored.
(Guess how I know this!)
How can you GET the need to save for retirement without experiencing the pain of being unprepared?
Ask yourself the following question.
When I retire, how do I plan to replace my income?
Income replacement is the real reason to save for retirement.
On the day you retire, the income on which you have always depended stops.
There is no more paid time off, holiday leave, sick leave or even a payday. When you happily retire, so does your paycheck.
There has to be a plan in place to replace the income on which you are used to depending.
Without an income replacement plan in place, the only other option will be to drastically cut expenses.
Don’t coast on the assumption that social security will provide the necessary income replacement.
Currently, social security typically provides a fraction of what you are used to earning. For a reality check, create or log in to your social security account or check your annual statement to get an estimate of what your expected income will be at retirement age.
It’s a pretty big wake-up call.
Are you assuming that you will have a pension from your employer?
Not all employers offer a retirement option.
Even if a plan is available through your employer, it’s almost a guarantee that you will be expected to contribute.
If your employer offers a retirement option, it is critical that you familiarize yourself with the details of the plan and begin contributing as soon as possible.
Those who are self-employed, not employed or whose employer doesn’t offer a retirement plan, will be solely responsible for setting up and maintaining a retirement account.
If you can’t afford to save for retirement, and you can’t afford to live on your expected social security income, your options to retire will be limited.
It may be necessary to continue to work, at least part time.
Difficult lifestyle decisions may have to be made.
Saving for retirement simply means having an income replacement plan in place.
Saving for retirement can be mind boggling and intimidating, but don’t let that stop you from getting started.
You don’t want to be facing retirement when you finally GET it.
Unlike an engine that can be replaced, there is no replacing the lost years when you could have been saving.
Put an income replacement plan in place sooner rather than later. Your future self will thank you.
TAKE ACTION!!!
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