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Money Talk
by Jack Wagner
Don't Underestimate Your Ability
to Build Retirement Savings
Many of your fellow Americans just don’t think they are
capable of building a reasonable amount of savings for their retirement
years. Should you be equally gloomy? Not if you save and invest early and
often.
Just how pessimistic are people about building their
net worth? Consider these findings from a recent survey sponsored by the
Consumer Federation of America and the Financial Planning Association.
- Only 26 percent of the adults surveyed think they
could accumulate $200,000 in net worth in their lifetime.
- A whopping 21 percent of those surveyed said winning
the lottery would be the most practical strategy to accumulate several
hundred thousand dollars.
In looking at these figures, two things just out: The
first group may be overly pessimistic – and the second group is totally
unrealistic. In fact, a person’s chances of winning huge in the Powerball
are about 1 in 120 million, give or take a few hundred thousand. So, if you
are doubtful that you’ll accumulate enough money to retire, and you can’t
count on the lottery, what can you do to improve your saving outlook? Here
are a few suggestions:
- Set some goals. You will find it easier to
invest for your retirement if you know how much money you will need to
reach your goals. Try to visualize the type of retirement lifestyle
you’ll want. Will you travel? Volunteer? Open your own small business?
A qualified financial professional can help you set a general “price tag”
on your goals and show you about how much you will need to save each year
– and what sort of investment return you will need to achieve – to meet
your objectives.
- Put time on your side. The earlier you start
saving and investing, the better your chances of building the resources
you’ll need to enjoy a comfortable retirement. You might be surprised at
how much you can accumulate over time. For example, if you can afford to
put away $100 a month in a tax-deferred investment *such as a traditional
IRA) that earned a hypothetical 7 percent a year, you would accumulate
more than $121,000 after 30 years. Even after you pay taxes on your
withdrawals, you’ll still have a sizable sum.
- Take advantage of your employer’s retirement
plan. If your employer offers a 401(k) or other tax-advantaged plan,
take full advantage of it. Every time you get a raise, try to increase
your annual contributions. At the very minimum, contribute enough to earn
your employer’s match, if one if offered.
- Avoid heavy debt burdens. Debt is one of the
biggest threats to your ability to accumulate the money you’ll need for
retirement. Every dollar you use to pay off a high-interest credit card
is a dollar that could be used for investing. Of course, it’s not easy
for many of use to make ends meet these days, but do whatever you can to
live within your means and avoid racking up a huge debt load that will
take you years to pay off.
By following these suggestions, you should gain
confidence, over time, in your ability to increase your net worth to levels
that once seemed unimaginable to you. And you can save money on those
lottery tickets, too.
Jack Wagner is an investment representative for
Edward Jones, an investment company with a 125-year history. For more information, contact
your local Edward Jones investment representative or visit their web site at www.EdwardJones.com
Copyright © 2000 Recyclers Power Source
All rights reserved. Information in this document is subject to change without notice.
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