Are You A Super Saver?
A super saver saves, in our opinion, about 20-30% of their income. That’s an ambitious goal, but it’s not so ambitious as to be impossible. So, let’s take a look at the ways and whys of super-saving.
The medical field’s steady advances have increased our life expectancy. If you are a 65 year old woman, you have a 50% chance of living to age 85. A 65 year old man has a 50% chance of reaching age 82. This means we are living longer, healthier lives. It also means our average time spent in retirement has gone up. Source-MSN Money.
Our retirements have gotten longer and longer. Unfortunately, our savings rate has consistently fallen. Currently, the savings rate hovers around 5%. Our savings rate was 10% as recently as the early 90s. With people living longer and saving less, many of us are not prepared for retirement. In fact, almost 30% of households with members 50 years or older have no retirement savings whatsoever. Source- CNBC.
The easiest way to save is to make it a priority. Unfortunately, when you have to pay bills, eat, entertain yourself, buy clothes, etc., saving is simply not going to take precedence. And trying to save when you have the money in your hand is a little bit like going to the grocery store when you’re hungry. You might intend to come out of there with fruits, vegetables and soy milk but odds are the frozen pizza and Oreos are going to win that battle.
Thus, make the decision to save before you are even tempted to spend it. If you are in a workplace plan with automatic contributions, set your contributions and participate in the plan as soon as you can. Raise your contributions by a percentage or two every year. Many people easily adjust to this; in fact, many people don’t even notice.
If you don’t have a workplace retirement plan, send your boss our way to get one set up. If that doesn’t work, and you find yourself on your own, max out your IRAs / Roth IRAs every year you possibly can. Contribute as early as possible. If you don’t set the money aside, it will find ways to disappear throughout the year.
Take advantage of automatic contributions. For instance, Scottrade has a program called MoneyDirect. It allows you to automatically contribute money into your IRA / Roth from your bank account at regular intervals (weekly, monthly, etc.). Challenge yourself to raise your contributions at regular intervals.
Saving is like any other skill. It takes practice, and no one becomes a super-saver overnight. However, tracking and prioritizing your savings, setting up automatic contributions and making a consistent effort to increase your savings every year will get you there. If you have any questions about IRAs or savings, we are here to help.