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1. The percentage of Americans confident in their retirement is heavily increasing, according to the 2015 annual Retirement Confidence Survey. Twenty-two percent of Americans report feeling very confident they have enough money for a comfortable retirement, up from 13 percent in 2013. Thirty-six percent said they were somewhat confident. Why do you feel these numbers are steadily rising?

One very big reason why people feel more confident recently is because the stock market has appreciated between 30 – 40 percent over the past five years. This has a significant ‘halo effect’ or impression that personal wealth has increased so retirement seems more affordable. Also, home prices have stabilized and unemployment has decreased to a level where people feel comfortable in their jobs for the future.

There is optimism around retirement in the U.S. Here, an older employee sits at his computer. 2. The majority of Americans surveyed who were “very confident” about their retirement reported having a detailed retirement plan. How important is it to have a retirement plan?

You absolutely need a plan for retirement, without a plan you will never meet your needs or goals for retirement. A satisfying retirement depends on what you and your family want to do in retirement. Someone who wishes to travel the world and live in luxury will need far more savings than someone who wishes to sit by a pond all day and fish. So you start with defining your needs in retirement and that will tell you how much you need to save and where you need to invest to obtain the returns you need to fund that future vision.

3. When should someone start thinking about retirement and what is the first step in building a retirement plan?

You should be starting to think about retirement as early as possible, but remember it is never too late to start saving. You need to understand the costs and benefits in saving for retirement. You are actually delaying satisfaction until a time when you are not working to live; in other words, saving for retirement should not impinge on your living a full life today and allow for a satisfying future.

The first step is examining your expenses and income and looking for opportunities to place at least a small amount of money aside in a retirement account. The second step is to review what your employer offers for retirement accounts and realize the benefits that those accounts offer (low fees, company matching, free advice, etc).

4. Cost of living and day-to-day expenses were the top two reasons people either don’t save or don’t save enough, with over 50 percent of workers citing these factors. How can people attempt to overcome the many reasons that can keep them from saving for retirement?

It really is simple analysis of what is important to you and what you are doing with your current income. My first step in saving was to keep a log of every penny I spent for a month; I kept a book on me (now you can do this easily with many apps on your phones) where I wrote down  very item I purchased from my morning coffee to my evening entertainment and everything in between.

I soon realized with some targeted spending cuts I could save a lot for the future without changing my standard of living one bit. It really is easy once you see where your money goes to put money aside for a goal in the future.

5. Sixty-nine percent of people said they could save an extra $25 a week more then they currently do for retirement. What is the best way to know how much to save, and can a small amount like this make a difference in the long run?

The best way to know how much to save is to detail what you want your life to be and determine how much that will cost. You also need to look at your assets and liabilities and determine your future cash flows (income and expenses).

If you save $25 a week that is $1,300 a year. If you can earn even 2 percent on that money it will be worth roughly $15,819 in ten years at 4 percent interest that becomes $17,532 and at 8 percent interest that would be $21,639.

Another way to save is to pay down debt (and not incur more debt). If you took the same amount of money and paid down a car loan or home loan, the compounding effect is the same and you can cut years off of a loan in this manner with no refinancing fees or penalties. Doing this also raises your credit score and lowers the cost of borrowing for you in the future if the need arises.


Stephen Paulone, Ph.D. is the Director of Graduate Business Programs offered through the Malcolm Baldrige School of Business at Post University. He has more than 25 years of experience in manufacturing, marketing, and finance, and has held such positions as marketing manager, manager of new product development, marketing program manager and finance director. 

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