WHY YOU MUST SAVE

by Bill Tucker on November 9, 2015

“Are Retirees Better Off Than We Think” is the title and topic of a MarketWatch article by Alicia Munnell.  What screams out at me is not the methodology used to calculate income, but rather how poor retired folks are!!!!  Look at the chart below.

Income for Retirees

Regardless of how you calculate the results, 60% – yes, well over half – of all retired households live on under $27,000 per year.  20% live on under $10,000 per year.  That is a hugely sad statement regarding the financial situation of retirees.  A family works their entire life, over 40 years, to get to the “Golden Years”, and has saved exactly $0.00 dollars.

What kind of retirement living do you get on $27,000 per year?   That is only $2,250 per month to live on.  That’s the top of the scale!  You are not traveling abroad, when an economy ticket for one costs over $1,500.  You may drive south for week or two and stay in a lousy hotel.  And that’s best case.

If you’re in the bottom 40% (nearly half of all retirement households), you’re maximum income is only $17,000 per YEAR, under $1,500 per month.  That may cover a modest rent payment and food.  Hopefully you have no credit card debt at that point.  You may be living on macaroni and cheese and hot dogs.

It is time to get an understanding of how dire this situation is.  This is true especially for young people, because the earlier you start saving, even small amounts, the easier it is to get into the habit of paying yourself first, and having a retirement that is enjoyable and meaningful to you.

What do you want to be when you retire?  If you want to be poor and broke, don’t save money.  If you want an enjoyable retirement, start saving now, no matter how hard it seems.

 

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