2982: 7 Lame Reasons People Don't Save for Retirement by Philip Taylor of PT Money on Financial Future

[00:00:00] This is Optimal Finance Daily, 7 Lame Reasons People Don't Save for Retirement by Philip Taylor of PTMoney.com

[00:00:09] U.S. workers aren't saving enough for retirement, nowhere near it.

[00:00:14] The annual retirement confidence survey put together by ebri.org found that, quote,

[00:00:20] quote, more than half of workers report they and or their spouse have less than $25,000 in total savings and investments, excluding their home and defined benefit plans, including 29% who have less than $1,000, end quote.

[00:00:37] Those are troubling numbers, but they're not new. Over the past few years, the survey has reported similar results.

[00:00:44] Obviously, people should be saving for retirement, right? So why the disconnect?

[00:00:49] If it's as simple as periodically taking some of your earnings and putting it into a retirement account, why aren't more people doing it?

[00:00:57] I've made a few excuses in the past and I occasionally hear a few from others.

[00:01:02] Let's look at some of these excuses and knock them down one by one.

[00:01:06] Number one, it's selfish. This excuse burns me up.

[00:01:12] Saving for your retirement is the complete opposite of selfish.

[00:01:15] If you have retirement savings, you won't depend on the taxpayers, the church, your kids and relatives, etc. to feed you and house you when you can't work.

[00:01:25] The survey numbers mentioned should destroy this excuse.

[00:01:29] People aren't saving. Why?

[00:01:32] Most likely because they're being selfish with current dollars.

[00:01:36] They aren't choosing to give it to their future self.

[00:01:39] Saving for retirement doesn't mean that you have to retire to Bali with a yacht and personal chef.

[00:01:44] Saving for retirement is about affording life when you can't work.

[00:01:48] The retirement industry certainly likes to package it in a flashy way.

[00:01:52] But that's the icing on the cake, in my opinion.

[00:01:55] 401ks and Roth IRAs are about helping you meet your basic needs.

[00:01:58] If you have some left over, give it all away if you'd like.

[00:02:02] Number two, it's pointless.

[00:02:05] This isn't really an excuse.

[00:02:06] It's more of a give up.

[00:02:08] And truthfully, the comment can't really be taken seriously.

[00:02:11] There certainly is a point to retirement savings.

[00:02:15] Providing for you and your spouse when you can no longer physically work or take care of things.

[00:02:19] I can't stress this enough.

[00:02:21] Number three, it's too complicated.

[00:02:24] It doesn't have to be.

[00:02:25] You can save for your retirement using a regular free checking account with the occasional $25 contribution.

[00:02:31] I don't recommend that method, but it could certainly be used.

[00:02:35] And in a year's time, you'd likely be better off than the pitiful thousand dollars reported.

[00:02:40] Here's a wake up call.

[00:02:42] To have a little success in life, you might just have to learn something.

[00:02:45] The beautiful thing about the information age is that the best investing advice is available to everyone.

[00:02:52] Visit your local library,

[00:02:53] pick up the highest rated personal finance or retirement book and get cracking.

[00:02:58] Too lazy for a book?

[00:02:59] Download an audio book or read through this blog.

[00:03:03] Number four, it's only for the rich.

[00:03:05] There are many people who retire each year who never had more than a lower or middle class income.

[00:03:11] Take Leonard McCracken, 107, who retired back in 1969 after having never made more than $10,000 a year.

[00:03:21] You don't have to be rich to afford retirement.

[00:03:23] If you can save just 10 to 15% of your income, then you can really give yourself some cushion for your retirement years.

[00:03:30] Number five, it's only for old people.

[00:03:33] The earlier you get started, the easier time you'll have in coming up with adequate retirement savings.

[00:03:39] When you're young, retirement is a long way off, so it's easy to avoid the topic altogether.

[00:03:44] However, as a young earner, you have most of the same opportunities to save as older workers do.

[00:03:50] And you've got time on your side.

[00:03:51] You even have the chance to retire early.

[00:03:54] Get with it.

[00:03:55] Number six, it's too late to get started.

[00:03:59] This one is tough.

[00:04:00] There does come a time when it's too late.

[00:04:02] But for people in their 50s and 60s, this shouldn't be a valid excuse.

[00:04:06] Will it require a Herculean effort?

[00:04:09] Probably.

[00:04:09] Will you need to slash expenses to racket up some income?

[00:04:13] Yes.

[00:04:14] But with things like IRA catch-up contributions and the benefits that come from postponing Social Security,

[00:04:19] you have something to help you get there.

[00:04:22] Number seven, it's too risky.

[00:04:25] Isn't it worth a little risk?

[00:04:26] Let's see.

[00:04:27] Here are your two options.

[00:04:29] One, retire with nothing because you didn't save.

[00:04:31] And two, retire with something.

[00:04:33] That's an easy choice.

[00:04:35] Still, even without that simple equation, it makes sense that you can have control over your risk.

[00:04:40] If you take control over your retirement savings, you can invest in whatever assets fit your risk tolerance.

[00:04:47] If all you can stomach is FDIC-insured CDs and bonds, then put all of your money there.

[00:04:53] 107-year-old Leonard, mentioned earlier, never entered the stock market with his retirement savings.

[00:04:59] I don't recommend this completely risk-adverse approach, but it can be done.

[00:05:07] You just listened to the post titled, 7 Lame Reasons People Don't Save for Retirement, by Philip Taylor of PTMoney.com.

[00:05:15] I totally understand why young people especially don't think about saving for retirement because I was in the same boat.

[00:05:21] When I was in my 20s, I just assumed saving for retirement was something I'd do later when I was making more money.

[00:05:27] When you're 20 and assume you'll retire in 45 years, you just feel like you have so much time to figure it out.

[00:05:34] And when retirement seems so far away, it's difficult to prioritize it.

[00:05:38] When I discovered the FIRE movement, which stands for Financial Independence Retire Early, it totally demystified retirement savings for me.

[00:05:47] First of all, it helped me wrap my head around how much I might need for retirement.

[00:05:52] And seeing real numbers made the whole thing feel so much more accessible.

[00:05:55] I also learned that saving for retirement doesn't just benefit me when I'm actually going to retire.

[00:06:02] Aggressively saving while my income is good and I'm relatively young opens up some options to take my foot off the gas prior to traditional retirement.

[00:06:12] And that should do it for today.

[00:06:13] Have a happy rest of your day and I'll see you on the Thursday show tomorrow, where your optimal life awaits.

[00:06:18] If you don't love this, the right is not the only one of the most people that don't agree with the center.

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