Life has a funny way of turning your plans on their head. People spend the better part of their working yours contributing to their future retirement so they can live and be happy when they have left the workforce, but there are many factors that could affect your retirement and your retired life. About 59% of people recently surveyed have indicated some savings regret in their retirement, citing a lack of more savings when they were working as a huge source for their financial fears. If you are saving for retirement, Factum Financial has been very clear in the past about factors of the 401(k) savings plan that you need to be mindful of. However, you must ask yourself if your savings plan is at risk to get wiped out by one of these potential retirement killers.
Overestimating Social Security
Social security might have been a great system for the greatest generation when they were retiring, but the system isn’t what it used to be and you can’t really afford to rely on that money for your retirement. When the system was originated there were ten workers propping up the system for every retiree but that number has been reduced to two, meaning there is not enough money being paid in to support people that are living on the system now, let alone in the future. There is also some expectation that the system may be defunkt or bankrupt within the next 50 years so any expectation of retirement savings from social security is diminishing daily. Many people overestimate the availability of funds in social security, when they should realistically prepare for how much money will be available to them when they retire.
Unfortunately, divorce happens. There is some hope as it seems like younger generations are getting divorced at lower rates than older generations, but that doesn’t make things easier for those it happens to now. If you do not have a prenuptial agreement and you are going through a divorce, your spouse is entitled to part of your retirement savings, which can be a serious hit especially if you are nearing retirement age. Divorce is a tricky addition to this list of retirement killers because it’s not always avoidable and there is a lot of red tape and litigation that makes preparation for such an event very difficult.
There are a number of bad investments or investment strategies that you can put money into that might be detrimental to the health of your retirement. These can be as simple as a lack of research in the funds your 401(k) savings are tied up in or they may be more complicated wealth strategies. Among 13 of the most ill advised money makers for inexperienced investors are animals and livestock. Livestock investments take seasoned pros and a lot of research (with just a dash of luck) to turn a major profit. Another one is collectibles like art or other products that are supposed to accrue value over time. You will have to spend money on protecting them and then they may not be worth all that much in the future anyway. Think about people that invested hundreds of dollars into Beanie Babies in the middle and late 90’s. How well did those hold their value? Be wary of poor investments as a way to make money for the time when you retire.
Most people have been saving for retirement with 401(k) accounts for the last twenty years, if not longer. This is because many employers no longer offer pension plans, but many do offer an employer sponsored 401(k) account and some are even willing to match their employees contributions. It’s become the standard for retirement savings. However, how often do people question their retirement accounts and how much they actually cost you over the life of your money inside them? When the market took a dive in the great recession, many people lost huge percentages of their retirement savings that freefell with the market and some were not able to recoup that loss before they were forced to retire. It’s hard to find any other product that one puts their plans for the future on the line for which has such an “acceptable” level of volatility.
Perhaps the worst way to prepare for the future is to choose not to prepare at all. Whether you are a millenial that feels the weight of the inability to save under the expanding student loan bubble or an older generation with a healthy suspicion of the dukes of Wall Street, choosing not to save for retirement could leave you destitute or reliant on others in the future when you are unable to work. While these other retirement killers could strangle your financial plans, procrastination will kill your financial garden before it can even begin to grow.
Saving Safely For Retirement
Don’t let your future plans get snuffed out. Fan the flames safely and grow your wealth so it will provide you happiness and warmth long after you have left the workforce. How do you do this if the markets are volatile and so many other savings vehicles are detrimental to your financial planning? You save with the Infinite Banking Concept. You can electrify your savings plans for the future with IBC and create a cashflow system that protects your cash, creates tax-free growth and gives you the power to act as your own banker. Want to find out more? You need to contact a Factum Financial wealth strategist today. Call 480-525-8180 to speak with our team and schedule your no-cost wealth strategy session today.
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