I recently shared a report from The Conference Board on the impact of the Great Recession on individual wealth and how it effects retirement plans. It made me curious on what the new normal of retirement might actually look like.
Mr. Bartender and I talk about retirement regularly. What we want our retirement to look like. What our financial goals for retirement are. SHRM recently published a report from MetLife titled “How America’s Leading Edge Baby Boomers will Transform Aging, Work & Retirement” [PDF]. Regardless of your current age, it’s an interesting read.
What adds a layer of complexity to the conversation about retirement are the statistics about how much people have actually saved towards retirement. The Department of Numbers cited the annual Retirement Confidence Survey and the numbers are scary. Here’s a snippet from the report:
56% of workers had savings of less than $25,000 in 2011 and only 10% had savings of $250,000 or more. The survey also found that 58% of workers say they will need more than $250,000 in retirement, so there’s quite a gap to close.
The only way I know to start closing that gap is for people to become educated about money. And unfortunately, I don’t know that we spend a lot of time teaching others how to understand money. While I’m not in a position to dispense financial advice, here are a few things I’ve learned over the years when it comes to money:
Know the different ways you can invest money. Mr. B and I took a couple of financial planning classes years ago. Not trying to be a day trader or anything. We just wanted to understand the different options – bonds, annuities, etc. This allows us to make what we consider to be the best decisions for us.
Learn how to read a prospectus, annual plan and stock data. Whether it’s for your 401(k) plan or with your broker, it’s important to know about the entities you invest in. That’s where this information becomes valuable. I was lucky – my father-in-law was in the finance business and spent a lot of time sharing his knowledge.
Find financial resources you like and trust. There are many financial blogs, magazines, television shows, etc. They all have their advantages and disadvantages. Find the ones you like best for your situation. I’ve discovered a few financial blogs that I enjoy such as Money Ning and Wise Bread.
Tap into consultants and brokers as necessary. I’m pretty sure I will never know all there is about the financial markets so that’s why I have others around me who can answer questions and provide additional information. My accountant and broker are great sources.
Understand cash flow and emergency funds. This is not just applicable to the self-employed. It’s important to understand your income and expenses along with what you would do if that was interrupted for some reason. This is equally true for unexpected costs like something breaking down. Deciding how much emergency funding you want to have available and how to access that money quickly is essential.
Read your insurance policies . As a person who has been through a catastrophic accident, I can’t stress enough the importance of understanding how your insurance works. Not just your health insurance, but homeowners, auto, life, etc.
Please share your suggestions in the comments. What resources are you using to learn more about money? I know we’re often reluctant to talk about money matters but we have to start giving each other a means to learn more. I really look forward to hearing from you. Thanks!