Financial Fundamentals: Retirement Plan Series
Kimber L. Barton, CFP®, AIF®
[email protected] 615-301-5050; 5409 Maryland Way, Ste. #140; Brentwood, TN 37027
The 1% solution…
Instead of worrying about what the market is going to do or not do, give what follows some thought instead.
In 2012, research by Putnam Investments suggested that households putting less than 10% of their salaries or income toward retirement are at risk for not meeting their retirement income needs. People saving 0% might replace only 54% of their income (assuming they are eligible for Social Security.) Saving 3% of your income might get you up to a 56% replacement ratio and those saving over 3% and up to 10% might meet up to 84% of their needs. Obviously, you’re better off saving 10% or more.
I think the message here is that we need to SAVE MORE MONEY...what a concept! If we all saved 10% or more of our income we’d worry a lot less about the future of many things notably our own financial security (or social security for that matter.)
“I can’t afford to save 10% of my salary” is what I typically hear in response. I normally address this response with a challenge: I dare you to increase your savings by 1% and then tell me it “hurt.” I believe you won’t miss it. Increase by 1% each year or better yet every 6 months. When you can “feel it” a little…take a break. Nothing worth achieving is accomplished without a little “pain”…it’s how we know we’re making progress.
Before the sun sets today, increase your current level of savings by 1%...go on… I dare you!
Kimber L. Barton is a financial advisor located at Brentwood Financial Partners, 5409 Maryland Way, Suite 140, Brentwood, TN 37027. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 615-301-5050 or at [email protected].