Sooner or Later
By Nevin E. Adams, JD
Director, American Savings Education Council
National Save for Retirement Week is next week, and America Saves Week will be here before we know it. So too, retirement – which seems far away to many, and IS far away for some – seems today to be a far off goal, something that can wait for another day, a more convenient time. Something that can afford to wait to start.
Indeed, it’s easy, in the normal press of life, to put off thinking about retirement, much less thinking about saving for a period of life many can hardly imagine. We all know we should do it—but some figure that it will take more time and energy than we can afford just now, some assume the process will provide a depressing, perhaps even insurmountable target, while others don’t even know how to get started.
Here are five reasons why you—or those you care about—should save – and specifically save for retirement - now:
Because you don’t want to work forever.
If you want to stop working one day, you are going to have to think about how much income you will need to live after you are no longer working for a paycheck.
Because living in retirement isn’t free.
Many people assume that expenses will go down in retirement, and they may for some. On the other hand, retirement often brings with it changes in how we spend, and on what – and that’s not necessarily less. For example, research by the Employee Benefit Research Institute (EBRI) has found that health-related expenses are the second-largest component in the budget of older Americans, and a component that steadily increases with age.
Because you may not be able to work as long as you think.
The Retirement Confidence Survey (RCS) has consistently found that a large percentage of retirees leave the work force earlier than planned—47 percent in the 2013 RCS, in fact—and many retirees who retired earlier than planned cite negative reasons for doing so, including health problems or disabilities (55 percent); changes at their companies, such as downsizing or closure (20 percent); having to care for spouses or other family members (23 percent).
Some retirees do mention positive reasons for retiring early, such as being able to afford an earlier retirement (32 percent) or wanting to do something else (19 percent), but just 7 percent offer only positive reasons.
Because you don’t know how long you will live.
People are living longer and the longer your life, the longer your potential retirement, particularly if it begins sooner than you think. Retiring at age 65 today? A man would have a 50 percent chance of still being alive at age 81 (and a woman at age 85); a 25 percent chance of living to nearly 90; a 10 percent chance of getting close to 100. How big a chance do you want to take of outliving your money in old age?
Because the sooner you start, the easier it will be.