*This article was originally sent to email subscribers on March 2014 and is still relevant today.
It’s official…we aren’t as well-prepared financially for retirement as we should be.
With the baby boom juggernaut just starting to hit retirement, this should be a wake-up call for all of us, no matter our age.
The Data Tells the Story
You may find the following data about retirement savings rates in North America to be somewhat unsettling… I know I did.
According to a research report, “The Retirement Savings Crisis – Is It Worse Than We Think“, published by the National Institute for Retirement Security (NIRS), retiring Americans do note have sufficient retirement savings and accumulation rates to adequately fund their desired retirement lifestyle.
The Numbers Are Startling
Here are some key findings from the report:
- The retirement savings deficit for all retirees in the US is estimated to be between $6.8-$14.2 trillion
- 45% of (US) households (38 million) do not have any assets in retirement savings accounts. You read that right…zero!
- Based on 401(K) accounts and IRA balances alone, it was found that 92% of working households in the States do not meet even conservative retirement savings targets for their age and desired income.
- When net worth including real estate holdings was included, a breathtaking 65% still fell well short of recommended asset levels for a secure, dignified and comfortable retirement.
This is scary stuff.
It’s shocking to think that average retirees will not have sufficient assets and income to live the retirement lifestyle they’ve always envisioned for themselves.
With so much wealth in the developed world, how could this have happened?
6 Reasons Why Many Boomers Aren’t Reaching Their Retirement Savings Goals
Some people fail to reach their financial and retirement savings goals for a number of reasons. Here are six that you need to be aware of (and be prepared to do something about):
- Insufficient Financial Knowledge
- The Wrong Attitude
- Bad Habits
- Poorly Articulated Goals
- Lack of a Plan
- Procrastination and a Lack of Action
Let’s examine each of these in more detail.
- Insufficient Financial Knowledge
Not having sufficient financial knowledge isn’t in itself a major obstacle to achieving financial goals, but when you combine it with some of the other issues mentioned here it becomes problematic.
The good news is that plenty of formal, informal and free opportunities are available both online and offline, so lifelong learning is only a few clicks away!
The key to learning is consistency, so make sure you include some learning opportunities in your routine. Don’t worry about learning the wrong things. Focused learning helps, but never underestimate how important general learning is… especially in financial matters.
2. The Wrong Attitude
Do you have a winning financial attitude? Many people don’t, often believing that someone else (employer, union, or government) should provide for their retirement financial security. Nothing could or should be further from the truth.
Sorry, but you won’t get very far financially unless you take responsibility for your future and develop a passion to learn, a clarity of vision and a well-articulated action plan to get you where you want to go.
It all starts with the right attitude.
3. Bad Habits
I don’t want to get too personal here but collectively we have too many bad habits that really hamper our ability to get ahead. Here are a few:
- Spending more than we earn
- Having too much consumer debt
- Not saving/investing consistently enough
- Giving away our tax dollars too easily to the government
You’ll need to shed a few bad habits and replace them with positive ones if you want to create the financial success that will allow you to live your chosen lifestyle…both today and in the years ahead.Goal Setting
Our goals drive our plans for the future. They define the “what” and “by when” of your plan.
It’s difficult to achieve goals that aren’t clearly articulated so be S.M.A.R.T. when you’re setting your goals.
Make sure they’re: specific, measurable, attainable, relevant and time-bound if you want to dramatically improve your chances of having a great retirement.
4. Lack of a Financial Plan
A plan creates your blueprint or roadmap for the future. It looks at where you are today and sets a timetable to reach a series of predetermined goals.
The ultimate goal, of course, is to arrive at your “retirement” destination in great financial shape. Not having a plan in this day and age is simply not an option.
5. Procrastination and Lack of Action
Too many people set goals, develop a plan and then fail to implement any meaningful action to actually reach their goals.
The lack of results are entirely predictable and render any time spent on the other parts of the planning process worthless.
Remember…your goals remain just those unless there’s consistent action taken. After all, it’s action that turns goals into results.
People fail to achieve their financial and retirement goals for a variety of reasons.
It’s usually not due to just one factor, so don’t assume that you can do a few things right some of the time to achieve your most important life, financial and retirement goals.
You need to do most things right most of the time to stand a chance.
If you do, you’ll be rewarded with the ultimate payback…financial freedom and the ability to live the lifestyle of your choice.