(The key - even when clearly told, 2/3 are not willing to
cut back on their spending & indulgance, to make future better.)
The Motley Fool
Two-thirds of Americans share this surprising retirement confession
Katie Brockman 5 hrs ago
There's no one "right" way to save for retirement, and everyone will
have different goals and strategies. But regardless of how you choose to
save, it's essential to stash at least a little away for retirement now.
The earlier you begin saving for retirement, the easier it is to
accumulate several hundred thousand dollars (or more) for your golden
years. But if you start falling behind and put off saving for too long,
you'll likely need to make some sacrifices to be able to catch up.
However, not everyone is willing to make those sacrifices. Surprisingly,
67% of Americans say they'd rather cut back on expenses in retirement
than make sacrifices now to save more, a survey from TD Ameritrade
found. Although it's good that workers realize they'll need to make
sacrifices at some point, not saving for the future could have greater consequences than you think.
You may be left to depend on Social Security benefits alone if you run
out of savings in retirement, and the average check comes out to just
$1,471 per month. If that's not enough to cover all your basic living
expenses, you'll need to make some cutbacks.
In addition, you could see your costs increase in retirement, making it
even harder to live without savings. Healthcare expenses, for example,
continue to rise, and the average retiree spends approximately $4,300
per year on out-of-pocket healthcare costs, according to a report from
the Center for Retirement Research at Boston College. Long-term care
costs could also potentially break the bank, with the average
semiprivate nursing home room costing around $6,800 per month. Medicare typically won't help with long-term care, either, so expect to foot the
bill for those expenses.
At the very least, spending retirement with little to no savings will
make it hard to live the life you may have envisioned. Even if you don't
go bankrupt, you likely won't be able to travel extensively, spend your
time taking classes or learning new hobbies, or go out to weekly dinners
with friends. Rather, you'll be pinching pennies just trying to get by
every month. If that doesn't sound like how you want to spend
retirement, it's a good idea to ramp up your savings now.
Related video: Saving for retirement automatically (provided by CNBC)
Small sacrifices now add up to big savings later
The good news is that you don't need to sacrifice everything you love
now to grow your retirement fund. Especially if you get started saving
early, even a couple hundred dollars per month can go a long way.
The first step is to figure out where all your money is going to see if
you're overspending in certain areas. When you're not tracking your
expenses, it's hard to see exactly how much you're spending on
nonessential costs. A few dollars here and there on takeout,
subscription services, or morning coffee may not seem to make much
difference, but combined, these costs add up quickly.
It's easier than ever to start tracking your expenses, and you can even
use an app on your phone to do it for you automatically. Once you know
where you're spending each month, set limits in each spending category
and put the savings toward your retirement fund.
Keep in mind that you may not have to make drastic cuts. In fact, you
might be more likely to stick to your budget if you instead make several
minor adjustments. If you slash everything you love from your budget,
telling yourself you'll never buy lattes or go out for lunch again, it
probably won't take more than a few weeks for you to abandon your budget
and go back to your old spending ways. But if you aim to simply cut back
on -- not eliminate -- certain expenses, you can start making more
financially healthy choices that don't feel like major sacrifices. For
example, rather than getting coffee every day, cut back to just two or
three times a week. Or if you want to go out to dinner with friends
every so often, eat dinner at home the rest of the week.
By making small adjustments across your budget, you may be able to save hundreds more per month -- and that money can add up significantly over
time. For example, if you save an extra $200 per month and stash it in
your retirement fund earning a 7% annual rate of return, that will
amount to close to $100,000 after 20 years.
Saving for retirement requires sacrifices to some degree, and if you
don't make those sacrifices now, it will come back to haunt you later in
life. However, you don't have to slash your budget to the bare bones to increase your retirement savings. By making smart financial choices and
cutting back where you can, you'll be able to grow a healthy nest egg
that will make for a more enjoyable retirement.
The Motley Fool has a disclosure policy.
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