Retirement Savings – Reasons to Save
Because you don’t want to work forever,and you will ultimately be responsible for paying for your retirement: If you want to stop working one day, you are going to have to think about how much income you will need to live. Social Security provides a basic “floor” of income that you will have to build on for a comfortable retirement. Pensions have provided about 1/3 of retirees with some added income each month. Look for a job that comes with a retirement plan. Others have a savings plan at work. Use it.
Because you want to have enough money saved for a comfortable retirement: Many people assume that expenses will go down in retirement, but frequently that is not the case. Inflation means you will need more, not less. Higher property taxes could cause your housing costs to be more. You might spend less on clothing, except you’ll have more time to do it! Many other expenses may arise: increased medical costs and health insurance premium costs; financial help for children/grandchildren, or even elderly parents; more free time that could result in more money being spent on traveling and entertainment.
Because you don’t know how long you will be able to work: The Retirement Confidence Survey found that 39 percent of current retirees retired earlier than planned due to an unexpected event such as health problems or changes in their company such as downsizing. The earlier you start preparing for unexpected events, the better.
Because you don’t know how long you will live: People today are living longer. Retiring at age 65 today? A man would have a 50% chance of still being alive at 81, a woman 85. A 25% chance of living to nearly 90. A 10% chance of getting close to 100. How big a chance do you want to take of living longer than you savings lasts?
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