According to a new Winthrop University survey, 40% of the retired people in SC are living below the level that they would like.
When CN2 news called me for a comment on these results, my initial reaction was that the 40% seemed too low. Those people were honest about their answer, but I would guess the actual number is closer to 50-55%.
“What can young people do to make sure that doesn’t happen to us?”
I had 4 very basic, elementary concepts which I gladly shared. One of them even made the news that night, but in case you care about all 4 of them, here they are.
- Start Early. How early? Today. Early is today. Right now. If you’re 18, start now. If you are 35, carpe diem. The earlier the better because the money has longer to grow and compound.
- Make it Automatic and Consistent. If you work for a company that offers a 401(k) plan, contribute. You will not miss the amount that is taken out, and will instead adjust to the “take home” pay. If you don’t have access to a 401(k), open a Roth IRA or IRA and pick a dollar amount and day of the month to invest. Start with $100 on the 15th of every month…just make it automatic and consistent. You’re more likely to stick with it if it is automatic, and the consistency helps with the compounding. Also, you buy more shares when things are cheaper and fewer shares when things are expensive.
- Take Risk. If you are younger, and have an emergency fund, you need to take some level of risk with your retirement assets. We have never had a stock market correction we didn’t eventually recover from. Never is a long time. Inflation averages around 3%, and money markets are paying .1%, so take some risk. Own equities.
- Use Debt Wisely. If you want to pay off high interest credit cards or student loans, I am ALL FOR that. However, if you have a 30 year mortgage locked in at a rate of 4%, and the tax deduction helps you, there is NO reason to be sending double mortgage payments in hopes of being debt free. Mark Zuckerberg, the founder of Facebook, is worth approximately $16 billion, and he has a mortgage on his house. WHY? Because he knows his money is growing faster in an account than that mortgage is costing him. There is a longer explanation of this here.
That’s all folks. Those are my quick 4 pieces of info for the younger person to not end up living a meager retirement. If you care to see my mug on the news, click here and watch the video.