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.