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Investing for Retirement: Are You Avoiding These Common Misperceptions?

 

Troubling Statistics Circulate Regarding Investing for Retirement

b2ap3_thumbnail_Retirement-8.jpgAmerican workers are falling short on their retirement investments, according to the Employee Benefit Research Institute.Why? Investing for retirement can be intimidating, so it’s a task that is often ignored or delayed to such a degree that it becomes challenging to gain the financial independence that most adults hope for by the time their career has ended. Some believe they’ll have time later in their working years to accumulate a retirement fund; others invest in children’s college or pay off a mortgage early, rather than allotting as much as possible each month toward a retirement plan.

The greatest resource a worker has is time, because in many cases, investments left to grow will generate stronger returns as the years pass. Unfortunately, too many workers procrastinate for a variety of reasons. For some, it’s the crushing student loan debt they are working to pay down. Some workers have a belief that they simply don’t have extra money for investments, or that investing is too complicated. Others believe that their current allotment toward investments will be enough, not realizing that many Americans actually live ten to 15 years longer than they anticipate. What do recent studies say about Americans’ retirement behavior?

Troubling Statistics: American Workers Have Only a Fraction Saved
Nearly 30 percent of American workers have less than $1,000 in their retirement accounts. This includes everyone from people entering their careers to workers who have a few decades of employment. The statistics, however, improve for 50-year-olds. According to the U.S. Census Bureau, the average savings is nearly $43,000 – but this is only a fraction of what most adults will need to live on following retirement. In total, Boston College’s Center for Retirement Research estimates that in the U.S., there is currently a $6.6 trillion shortfall in retirement savings.

Delaying Retirement Due to Debt
Debt isn’t something most retirees look forward to, nor want to carry with them into a new season of life. However, debt is a growing reality for the U.S. retiree population. A study from CESI Debt Solutions found that nearly 56 percent of retirees in America are burdened by debt. Furthermore, since 1991, the number of bankruptcies for this segment of the population has risen by 178 percent.

Many Retirees are Worried or Concerned (Rather than Excited)
Americans for Secure Retirement found in its survey that nearly 90 percent of Americans are “worried” about retirement. Their main concern is having a comfortable standard of living. In fact, the percentage of those saying they experience worry toward retirement has increased by around 15 percentage points since 2010. Some level of concern toward retirement is normal, but what can you do to keep the worry from taking over your joy at having reached this milestone?

Connecting with a Professional Advisor
Investing for retirement can be marked with confusion and over-analysis, but if you’re working with a professional investment advisor, it can be a rewarding, exciting process that leaves you feeling confident about your future. Professional advisors can help you understand the investment process and show you options that have the potential for higher returns than what you’ll find in a traditional savings account. They also know the details toward tax considerations and Social Security maximization, taking the guesswork out of investing on your own.

Family Investment Center is commission-free, which means our clients receive objective advice without any conflicts of interest. No matter where you are in your career, we have strategies that can offer you more confidence (and less worry) as you approach retirement.

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