Genuine Fear of Funds for Retirement

An increasing number of people are beginning to actually fear retirement. That is largely because they are recognizing that their retirement funds are likely to be insufficient for them to lead a comfortable life, let alone enjoy some holidays. A recent survey by Allianz suggests that the figure has exceeded 60% with signs that it will continue to rise. Obviously the recession was a major problem to some people, especially those hoping that their real estate investment was going to bear fruit in the short to medium term.

With interest rates so low some investment has been struggling to match inflation. Certainly certificates of deposit and savings account cannot guarantee any significant growth and many were fearful to invest elsewhere for fear of losing everything. There are obvious requirements that people want in investing: minimal risk, maximum growth.

Dividends

Those who want retirement income should go for investments that provide regular dividends as a priority. Over the last 40 years they have out-performed non-dividend payers at almost 4:1. Few people can become skilled in investment overnight but there is plenty of information online to research so at least potential investors might begin to build up a knowledge base and know the questions they should be asking of a professional financial adviser.

There are general categories of investment worth supporting as well as some to definitely avoid. The older you are the more you should avoid risks even if you are tempted by headlines about possible returns. You could lose everything.

Debt Free

In order to be able to invest you must be in control of your finances and that means being largely debt free. There is nothing wrong with having a mortgage because despite the problems during the recession, real estate will appreciate in value over the medium to long term thereby building up your assets. Whether you want to use the equity to fund later life or not, there is certainly security in having such an asset. In contrast debt on credit cards is sheer waste. Card companies charge a high rate of interest on month end balances so it is definitely a wise strategy to pay off any balances. A more competitive interest rate is always available from a personal loan. If you take a loan out and pay off such balances you will be saving money by lending in installments. Just don’t build up any balances again!

You need to find a balance in your financial management strategy. In terms of your savings and investment you would be well advised to have a 401K retirement scheme in place because your contributions are pre-tax while employers should match those contributions to a certain level. Safe investments can be found in the S&P 500 where growth should be fairly good over the years. There is nothing wrong in getting specific advice of course.

Credit Cards

It sounds easy enough, doesn’t it? It does but it is remarkable how few people are in the happy position described above. The level of credit card debt in the USA is truly disturbing. The total US consumer debt divided by the number of cards puts the average debt per card at more than $5,000. Looking more closely at the figures, the average debt being carried forward month after month by those who never clear their balances is over three times that figure.

Social Security

It seems that people within 15 years of the official retirement age have fairly poor retirement provisions in place. Some 30% have nothing at all and will have to rely on the Social Security System to fund them when they have finally retired. The benefits decided will not provide more than a very basic retirement lifestyle. Indeed as people live longer and fewer people are paying into the System, benefits will drop by as much as 25% by the mid-2030s without significant action. That action, which is effectively taxation, is extremely unpopular in Congress so will it happen?

No wonder an increasing number of people are expressing their fears for the future. How that will reflect in terms of their acting to improve their situation remains to be seen. Time is certainly an enemy to those in their later years. Youngsters in contrast have time but should still prioritize starting to save, even in a small way.