If you start out with the aim of retiring at a certain age then you need to be in control of your finances. While it is not a perfect science because of the fluctuations in growth rates you can at least make some assumptions about what you will need to have in place and therefore how you should go about building up your fund. Social Security will of course contribute but you have to be aware that it faces an uncertain future. Estimates suggest without a major influx of money benefits will fall by up to 25% by the mid-2030s because people are living longer and fewer are currently contributing.
Retire Early
It appears that the average American citizen who has reached 65 and has retired has $175,000. That only represents around $7000 annually on which to live, clearly insufficient. Factors such as health, family and location mean that every case is different. Some people enjoy work and never want to retire, others dream of all the things they will be able to do when they have more time and would love to retire in the 50s when they should definitely still be fit enough to do them.
Ordinary people are not able to retire at that age. To have any chance of being close they need to have started to save for retirement as soon as they started work. They can only do that by being in control of their finances and largely debt free, other than a mortgage. Being debt free means not building up any balances on their credit cards because the interest applied is high. If you have done that then try a personal loan to pay balances off as a matter of urgency. Online lenders will provide a quick service at a rate that is far lower than credit cards charge.
Assumptions
When you plan your finances in general you will have to make some assumptions about what the future holds and for this exercise you should forget all about Social Security even though the chances of that still being in place are excellent. The exercise you should do, and you can obviously get help to do it, is to see how much you should be saving and what that will produce at any given time based upon 2 or 3 different growth rates. Only time will tell which of those rates will actually be the most accurate. You will need to build in a margin for error in the calculations. When it comes to retirement for example you will need to consider whether your spending will increase, reduce or be fairly constant.
Even though average growth in the stock market has been almost double figures over almost 150 years since it opened, it is wise to calculate at a point or two below to be safe. If it outperforms your calculations so much the better. If looking at retirement so much depends on how much of your income you can put away. You need to be realistic but hopefully can approach up to 15% to ensure a chance of early retirement but that certainly does not apply if you are already in middle age.
Installment Loans Can Be Utilized
The recession obviously hit the plans of many people all over the world and it was equally applicable in the USA. It’s is now history though there are still some casualties. Some people are still in the process of repairing their finances before they can even contemplate saving. That repair may even include the need for a short term loan but more often a installment personal loan which, because current interest rates remain low, come at a far lower rate than carrying forward credit card debt.
Financial problems cause stress to individuals and couples, often straining their relationships. For this reason alone money management is essential. A simple budget provides a guide to your financial position, identifying your income and all your monthly expenditure. Obviously you need to ensure that you are earning more than you are spending, ideally a decent amount more because you want to be able to be putting money aside as described above. It can be done so start today.
