Retirement is something that is frequently postponed and worried about later, especially for people who are younger. For young adults, retirement feels like it’s still so far away, so it doesn’t feel necessary to start planning so early because it barely feels real at all. Younger folks occasionally believe that they have much more time to worry about their retirement later on, or they believe that everything will fall into place and sort itself out in the end. Usually, people have imagined how they want their retirement to be, but most people fail to realize that none of that would be promising if they don’t start planning since that is what will determine the factor of their satisfaction with their retirement lifestyle. Planning is crucial as it helps detects an individual their source of income and expenses. From there, they are then able to establish a budget for their retirement based on their personal circumstances.
I never thought much about my retirement. I actually never thought about it at all, until I enrolled in this course and read Falling Short. I was then able to apply the information to my own personal life and pick out topics that I believe are most important and crucial for one to have a satisfactory retirement. A content and satisfying retirement may mean many different things to people when asked. However, just like other individuals, I want to have security, flexibility, and relaxation. I want to have freedom from financial worries while I am in retirement, flexibility to do what I want and lastly, I would like to be able to spend time with my family to relax, and to be able to travel when I desire to. The steps that I should take to prepare myself for what I want out of retirement would be to 1. To start saving, saving is a rewarding habit that will help me reach for my retirement goals. 2. I should also know my retirement needs as retirement can be expensive, so it’s important to get an estimate of approximately how much is needed so that I can take charge of my financial future. 3. Contribute to my employer’s retirement savings plan such as 401(k). It is an essential key to a secure retirement I believe. Over time, compound interest and tax deferrals will add up and make a big difference in the amount that I can accumulate. 4. Learn about the employer’s pension plan. It’s important to check to see what needs to be done to qualify and be covered by the plan and also to understand how it works. 5. Consider basic investment principles, saving is important but how one saves is just as important. The type of investment I choose will play a major role in how much I’ll have saved at retirement. 6. Do not withdraw from retirement savings early, not only will principal and interest be lost, but so will tax benefits and there will be penalties if the money is withdrawn early. 7. Deposit money into an Individual Retirement Account, IRAs can offer a stress-free way to save, they’re able to set it up to where a certain amount is automatically taken from either a checking or savings account, and that amount is then deposited in the IRA. 9. Find out Social Security Benefits. Social security benefits can help make retirement a bit more comfortable, especially for people who are lacking in savings. Social Security provides the majority of the income for the elders, so it’s important to find out about my benefits before I retire. 10. Do not retire early as it can reduce social security benefits. 11. Use home equity.
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The steps that I can take individually are quite similar to the steps that I need to take in order to be prepared. However, due to my personal circumstances at the moment, I’m unable to achieve all of them since I don’t even have a job at all, but I think that there are a few steps that I can take individually now. I’m a stay-at-home mom to two little girls who are only 1 and 2. My husband works full time, and when he’s not at work he’s watching the girls for me to go to class or just to give me some time to focus and worry about my school work. I wouldn’t exactly say that we are living our best life, sometimes we don’t have much left after making sure all ends are met. However, I believe that it’s better to start planning early rather than not planning at all. As mentioned before, one thing I could do that would make a big difference is to just save. I need to make saving for retirement a priority. No matter how much it is that I’m able to put in, something is better than nothing at all. I am also trying to increase my earnings potential. I believe that one of my most valuable assets is my ability to make money. I’m currently attending college not because I have to but because I want to get an education, hoping that it’ll somewhat help increase my earning potential. I think that one of the most valuable assets is the ability to earn money. Hoping that my education/degree will be able to enhance my earning capabilities so that I make more to be able to save more. Another one that I’m determined to do is not retire early. Honestly, I’ve always wanted to retire early until I learn how much money an individual miss out on by retiring early. A few more years in the labor force can make a bigger difference than one can imagine. I’m currently not working so I’m unable to contribute to 401(k) but after being educated and informed on what it is, I told myself that once I graduate and get a job. Another step that I am taking that will also benefit me later on in my retirement years is currently working to pay off my debt, such as my student loans and also my home. The steps that I’m currently able to do now won’t get me where I want to be later on during retirement, but it’s a start to get me where I want to be.
There are a few changes that need to happen systematically to aid in retirement efforts on a larger scale according to the information given in Falling Short. Those changes would be to improve encouragement to work longer, increase social security’s earliest eligibility age, maintain social security, consider investing part of trust funds in equities, improve how the 401(K) system works, expand coverage, and educate investors and help them invest wisely. It’s clear that often individuals are not able to overcome the retirement income challenge on their own, and as a nation, it’s important to step in and take action. A few examples of the step that are needed to be taken across the bigger picture is to continue to build on the system that we already have in place, but make some changes where improvements are needed. First, make sure that the retirement income system is well organized, and make sure that motives and products will encourage people to make good choices. People need to be educated so that they’re able to make the right choices. The second would be to improve encouragement to work longer, more working years would enable us to get more out of Social Security Benefits. Monthly benefits are increased by about 7 to 8 percent for each year that we delay claiming Social Security benefits. Not only will we receive more benefits, but those additional years of work will also increase 401(k) balances. Third, increase social security’s earliest eligibility age. Retiring at 62 is undesirable financially for people who can work longer, but because social security hints that people can receive their benefits at age 62, people tend to believe then that 62 is an appropriate retirement age especially because it is the earliest eligibility age for benefits.
When it all comes down to it, nearly everyone needs to save more money to be able to prepare themselves for retirement but it’s also just as important for the nation to encourage individuals to not only save but to also educate and make sure that individuals are aware that 70 is the age at which they will receive the maximum Social Security benefits and a significant amount will be reduced is they decide to retire early. Most individuals can only save successfully when there is an organized saving mechanism involved, it’s important to improve and make the 401(k) system work better by expanding coverage and making it mandatory that employers adopt automatic provisions.
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