Sixty-four percent of American workers are expected to retire with no greater than $10,000 in the bank. This prediction is one of the findings of a recent study. If you think this statistic is chilling, wait until you learn that 45% of those survey respondents admitted that they do not have any retirement savings at all. The remaining 19% have set aside so little money they are like to go broke at some point in their sunset years.
If you are in Utah, you do not need to be an expert in financial management in West Jordan, Sandy, Draper, or Murray to avoid such a bleak future. A quick self-assessment can help you determine whether or not you are on your way to having a cash-strapped retirement life.
So how do you know the probability of your retiring broke? Watch out for the following red flags:
You Do Not Have Rainy Day and Emergency Funds
You can’t build a nest egg if you lack adequate savings to cover immediate expenses.
In personal finance, there are two main types of savings you must focus on: the rainy day fund and the emergency fund. The former is meant for addressing minor unplanned (but entirely predictable) expenses while the latter is designed for surviving major hard-to-predict financial contingencies.
The logic behind building both funds is to avoid relying on debt to obtain cash to get through your next paycheck. You will need to place them in separate bank accounts, so you can fight the temptation to touch the savings the situation does not call for.
Saving for a retirement fund must also be high on your agenda. But you can’t make any meaningful progress if you always have to withdraw off of it whenever you need extra cash.
You Tie Your Cash to Your House
There is merit in buying a house: security. When it comes to investment, real estate is promising only when you can rent out several units all at once. Otherwise, your housing costs can offset any gain due to land appreciation and principal reduction.
Renting has its drawbacks, but at least it lets you free up more cash in your budget. If you put your excess disposable income in better-performing investment vehicles, such as stocks, you might grow your wealth passively at a higher rate.
You Think Wealth Management Is Just for the Rich
Wealth management might sound intimidating to an average American worker, but such a service is not reserved just for the top 1%. Regardless of your net worth, you should talk to a qualified professional to help get your finances in order. If you do not consider yourself rich in assets, the more you can need to consult a financial planner to strategize your retirement fund buildup as early as possible.
A comfortable retirement is a combination of luck and hard work. It is imperative to start building your savings ASAP, but it is never too late to begin somewhere. Because if you do not, you might remain part of the labor force longer than you hope for.
