Dollars & Sense: A good reason to save more now
After spending last weekend camping with my wife and kids up at Meadow Lake, I was able to see the world pure and clean, without the ruins of man. Don’t get me wrong, I am very grateful for all the modern conveniences we have today, but being one with nature and sitting on the side of a small lake, hoping the fish will bite, watching the kids run back and forth between dad and mom (who caught way more fish), helps me see life for what it is.
My wife often says that she feels like she would have been more adept and suited for the older era, around when the West was settled and life was simpler. I don’t think I’m man enough to take those conditions, but in a way I am jealous of only a few decades ago when there were just less options.
From a financial perspective, think about it. There was no such thing as a cell phone bill or an internet bill. A dishwasher was a luxury. Many families had just one family car, homes were simpler without vaulted ceilings, people didn’t have more than one TV in the home, and there was no way that you had thousands of songs within the reach of a button. Again, I say what a wonderful time we live in! It is amazing what the human mind has developed and what society has been able to achieve by working together. It is what makes our country the greatest in the world.
All these developments have vastly increased our choices and I believe that when we make proper choices, more choices are available, i.e. a college education often times leads to more job opportunities. Yet, with all these choices, it has seemed that we say “yes” most of the time and we tell ourselves “no” less often. We have completely different bills than our parents did when they were at our stage and this often amounts to thousands of more dollars a month. I believe the result of this has been increased pressure to work more and save less.
If you would have asked me five years ago how I felt about Social Security, my response would have been a lot different than today. What I have seen is that people are just not saving money on their own. I don’t believe that many people would save the 7 percent that Social Security takes out if it were left up to the average person. Here are a few facts published April 2 on the Social Security Administration website, ssa.gov:
• Social Security benefits represent about 38 percent of the income of the elderly.
• Among elderly Social Security beneficiaries, 52 percent of married couples and 74 percent of unmarried persons receive 50 percent or more of their income from Social Security.
• Among elderly Social Security beneficiaries, 22 percent of married couples and about 47 percent of unmarried persons rely on Social Security for 90 percent or more of their income.
It is definitely a trend in our country to have less in pension benefits and that will show in the future. The dependence on Social Security will be even higher for most Americans than it is today, if we do not save.
This means that we need to save more to make up the difference and it is not getting any easier to save with all the options we have to spend more money on all these new fun things. So here are my suggestions:
Set a budget. Making a budget is often a logical starting point to improve your finances. Set a reminder to check your budget at least biweekly. A mid-month check-in allows you to adjust your spending, if necessary.
Start saving. I encourage people to save their way to prosperity. That’s how you accumulate money for the long-term. People sometimes aim for the common tip of saving 10 percent or 20 percent of your paycheck to help ensure financial flexibility, but for those feeling overwhelmed, start smaller and work up to a larger goal. Try to save at the rate your employer matches, or a few percent lower if you’re not there yet.
Pay yourself first. We all think we have the discipline to manually put away money. Don’t leave it to chance. Set up an auto-withdrawal from your paycheck into your 401(k).
Mike Davis is a Rifle-based financial representative with Northwestern Mutual, the marketing name for The Northwestern Mutual Life Insurance Co., Milwaukee, Wis., and its subsidiaries.
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