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Six Retirement Planning Excuses You Should Avoid Making

retirement-planningPlanning for retirement is one of those financial tasks that many people put on the back burner until they're "ready." But much like committing to a healthier lifestyle, the time to start planning and preparing for retirement is not later—it is now.

Having worked in the financial services industry for more than 12 years, I've heard just about every excuse in the book for why people delay saving for retirement or aren’t saving more than they are. Check out the top six reasons, and learn how you can avoid falling into same trap.

  1. It's Too Soon

    Because of the power of compound interest, or the “time value of money”, the earlier you start saving, the more money you will have when you retire. For example, if you start your retirement savings at age 25, saving $2,000 per year for 40 years (until age 65) at an assumed annual earnings rate of 8%, you investment would grow to approximately $550,000. However, starting your retirement savings at age 35, and only having 30 years to save the same $2000 per year, your investment would only be worth  approximately $250,000…. a $300,000 difference! Bottom line: it's never too soon to start saving. The earlier you start, the more comfortable you will be in retirement.  

  1. I Don't Have Enough Money To Get Started

    Even if you have to start small, starting somewhere is better than not starting at all. By putting away whatever you can spare each month, eventually you will have more to work with and you'll be able to put your money to work for you.  Those who are willing to conduct an honest evaluation of their monthly budget and find out where their money is going each month often find areas to free up funds to set aside for retirement with minor life changes.

  1. I Plan to Retire on Social Security 

    Living solely on social security during your retirement is a risky plan. While 23 percent of married couples and 46 percent of elderly single people do in fact retire on social security alone, according to Bankrate, they experience a substantial decrease in their lifestyle. For example, if a married couple retires with a household income of $100,000, social security will only replace 44 percent of their annual salary, or $44,000. Obviously, it's not impossible to live on social security alone, but depending on where you plan to live, how much debt you may or may not carry into retirement, your health care costs, and any plans you have for wealth distribution, social security income alone may not be enough to meet your needs. 

  1. My Finances Are a Mess

    This can be more common than you think, but it shouldn't deter you from taking steps to plan for your retirement. Start by meeting with a financial advisor to evaluate your complete financial picture. They can help you get on track and find money that could be used to save for retirement.  Often times, simple changes to your spending habits or a better understanding of the true costs of retirement frees up money and creates a sense of urgency for people to taken action.

  1. I Don't Want to Think About It

    Putting your head in the sand is never a solution to dealing with your problems—especially something as important as planning for your retirement. You can either think about it now while you have control of the situation and time to plan for the future you want, or you can think about it later when it may be too late.   

  1. I Don't Know Where to Start 

    Planning for retirement can be overwhelming indeed. You must ask yourself these questions that require an answer:

    • How much do I need?

    • How long will my money last?

    • How much can I afford to save now?

    • How much do I plan to leave my heirs?

    • What kind of lifestyle do I plan to live once I've retired???

    • What are some things that could impact my finances once I retire?

First of all, if you feel lost on how to begin planning for retirement, don't worry; you are not alone. This is a fairly common feeling—even for those that may be well-versed in money management. Get started by talking to a financial advisor; he/she can help you paint a picture of what you want your retirement to look like, help you figure out how much that future will cost, and help you make a plan to achieve your goals.

Florence Nightingale once said, "I attribute my success to this - I never gave or took any excuse.” Be confident that you are financially prepared for your retirement by skipping the excuses and taking the necessary steps to put you on the road to success.

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