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Start Saving For Retirement

Sigma Investment Counselors

October 8, 2014

Changes in corporate pension plans, increasing risks associated with the certainty of public pension plan funding and questions about the long-term sustainability of social security payments suggest that Americans should step up their game and start saving for tomorrow, today.

Precise estimates tend to vary, however, it is clear that Americans are not saving enough to support their retirement and perhaps as many as one third of Americans have no retirement savings.

Saving for retirement, to be successful, has to be treated like any other budget line item.  It needs to be prioritized and implemented on a monthly basis.  Sometimes that is referred to as “paying yourself first”.  What you call it is not relevant.  A successful long-term savings strategy requires the same level of commitment that most of us give to our cable, cell phone and other “must have” items that come with monthly bills.

Any savings program should be tailored to the financial position of the individual.  This is not a “one size fits all” activity.  A useful guide might be, “The Millionaire Next Door:  The Surprising Secrets of America’s Wealth” by Thomas J. Stanley and William D. Danko.  This book is a compilation of research done by the authors into the profiles of U. S. households with a net-worth exceeding one million dollars.

The book describes a number of ways to reduce spending while maintaining a reasonable standard of living.  A savings program that is based on putting aside any money you have left at the end of the month  is bound to fail.  Saving requires a continuing evaluation of spending habits and a willingness to resist the lure of immediate gratification.

The importance of saving is not a new theme for Sigma blogs.  Our blog of January 15, 2014, reposted below, might be helpful.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®

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