A recent report suggests that as many as a thirds of US adults have made insufficient provision for retirement. The recent recession certainly has not helped the picture with real estate prices falling overnight but it is a worrying statistic. A good retirement fund can never be created overnight and the sooner adults start making provisions the better their chances of living a comfortable retirement. However, there are many pressures on income initially in the early years of a career and subsequently with a growing family. Along the way most people borrow money. Mortgages are one thing but there are many other reasons to borrow especially in the prevailing environment of low-interest rates.
Everyone should look closely at their financial situation. They may be advised to approach an expert to get help. They may be away from retirement it will come in the end. If there is a good reason to expect growth and if finance is required while interest rates are low then there is every reason to borrow for constructive reasons.
Building a good retirement fund is not easy; it is sensible to be open to every idea for creating it, even borrowing money. There are many imponderables to consider; personal health, the stock market and life expectancy are just three of them. There is not a great deal that can be done to make those things more predictable but that is no excuse for not taking action.
The Current Position
The exercise of creating a retirement fund begins with looking at current finance; income and expenditure. People who are yet to begin with saving for retirement must look at whether they have a regular surplus currently. Alternatively, they will need to increase their income or reduce their expenditure in order to be able to save.
Ideally, everyone should be putting in excess of 10% of their income into retirement. Indeed they should look to reaching 20% certainly as retirement comes closer. If it is clear that the best answer currently is to cut down on expenditure then a detailed list of current regular expenditure must be prepared. There are a few things that most people will be able to identify. Energy is one of the significant bills that every householder faces. The question is whether it is being wasted and whether it is more costly in the first place than is necessary.
Seek Help
On the positive side, there is help at hand both online and through advisers to help everyone with investment. The level of risk is always something that people will have in their minds. In the end, decisions are likely to be subjective but at least those decisions should be taken with comprehensive information taken on board. An adviser may also help with tax advice to ensure every individual is taking advantage of what is available; for example, annuities do not incur any income tax.
Health is certainly an imponderable. It is entirely sensible to have sufficient cover. The best of preparations for retirement can be destroyed by a sudden bill for a health problem that was not foreseen.
Real Estate
A consideration in middle age and beyond should be real estate. Most people would prefer to remain in a familiar neighborhood once they have retired but a large family home can be expensive once the children have moved out. There is a strong argument for downsizing well before retirement and investing any equity into something that is likely to grow with minimal risk. If there is little equity there are realistic loans available for short term costs to pay for the move and any furnishing of the new home.
Come the Day
Even closer to the day of retirement is the decision on when actually to do it. Social Security can be taken from the age of 62 onwards. The earlier it is taken the less a retiree will actually receive of course; it will be 25% less at 62 than at 66, the current retirement age for those born before 1955. Those who can hold on until 70 or are happy to keep working will receive 32% more at 70 than the figure at 66.
Everyone should make sure that their liabilities are minimal come retirement but that is no reason not to borrow money along the way especially at times when interest rates are especially low even just as an alternative to dipping into a fund being created for retirement.