Are You Saving Enough?

Are You Saving Enough?

The national savings rate has been steadily declining since 1944, when it peaked at 26.1 percent. In the late 1990's, when the market was at an all-time high, the rate was down to 2.4 percent. Currently the rate is between 1 and 2 percent.

One reason this is so alarming, is so many people are saving at a rate well below what they are spending on non-essential purchases. We are living in a live-for-today world. This may be due to trying to keep up with the Jones?, the fear of terrorism, or for any other reason. We need to realize that we are living in an era that has never been seen before and most individuals are not well enough prepared for what is to come. Today, we are living longer due to both medical advances and technology and we are retiring sooner. These two combined are a potential train wreck just waiting to happen, if you have not planned properly.

Most people have not saved enough to be able to retire and maintain the same standard of living. Proper planning for retirement requires much more than just saying to yourself, "I am retiring when I have a million dollars" or "I am retiring at age 60." It takes careful, well thought-out planning. The earlier you start, the better off you will be. Saving 10% of your income may not even be enough anymore, as people are living longer and healthcare costs are on the rise. Many retirees may have to go back to work, full or part-time during retirement.

Some ideas to help increase your savings include the following: participate in your employer's retirement plan; increase your contribution amount; take advantage of employer matching; diversify and don't overload on company stock; avoid borrowing from the plan and do not cash out the plan and spend the money if you leave your employer.

In the end, it is not about how much money you earn, it is about how much money you save.