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Prepared?
By Daphne | October 12, 2007
Yesterday’s story about retirement preparedness among black Americans lacking piqued my interest and made me search a little more today. I typed in “retirement planning 30s” into the search engine and found that poor retirement planning is not just an American phenomenon.
Asian Investor mentions talks about retirement preparedness…
The report shows that younger people in Hong Kong are more attuned with their retirement needs even if it’s still a long way away for them. Around 73% of the 25 to 29 year olds surveyed said they prefer to save for their future rather than spending now. A slightly lesser portion, or around 67% of those in their early 30s, said the same.
The report shows that the average age to start retirement planning is around 27 for Hong Kong males and around 27 for females. The report also showed that the consensus expected monthly expenses upon retirement was HK$20,000 ($2,600).
Those who are in their 30s are not as attuned to saving. The average age to start saving in Hong Kong is 27. I started before that. What is interesting is that younger people are more attuned to saving. That means that we, need to add a little more to our savings and let go of one or two things for a short time.
We are not attuned to saving because we want to buy, buy, buy and pay later. Buying is not a bad thing but if you are buying now to pay later for something you can’t really afford, then you shouldn’t do it. Buy, buy, buying helps dig a big coffin of debt. Saving or investing $25 today rather than spending that $25 could make the difference between future poverty and comfort.
There are differences in lifestyles choices for people who are investing. If you are frugal now, chances are you are going to be frugal later. That does not mean that you have to forgo a vacation or other diversions in life. If you are making $35K annually now, living comfortably and investing wisely what makes you think that you should be spending lifestyle of the rich and famous money as a retiree. Yes, most likely you will make more money as you move further in your career. That won’t make a whit of difference if you aren’t saving enough or underestimate your needs during retirement. There are people now who could not get by on $50,000 a year and others who would consider themselves wealthy if they earned that much annually. It is all about perception, and basic needs.
Hillary Clinton has a plan to change that…
She said the savings rate today is lower than it was in 1929, more than 75 million workers do not have employer-sponsored pensions to save for retirement and many people who do have retirement plans are not saving enough.
Under her “American Retirement Accounts” plan, everyone would have access to a portable 401(k) and the government would offer matching tax cuts of up to $500 to $1,000 to help middle class and working families save. The campaign estimates it would cost $20 billion to $25 billion a year to provide the matching tax cuts and said she would pay for it by freezing the estate tax at 2009 levels.
“These accounts will take the best of the 401(k) plans and make them available to every working family,” Clinton told an audience of mostly elderly people gathered at a recreation center.
Some people say she is trying to buy votes. Maybe she just had the guts to try to get people to save money. I just want to know where does Social Security fit into this schema. There will still be people expecting to get a Social Security check or they have idea how to get $1000 or $500 to save. Then for a major life event people could take money out. I haven’t been sold on this plan. Theoretically, it sounds good, but then again… so did Social Security.
It all boils down to education. When people have a better fiscal education they have the opportunity to make better choices. Major life event? What if people decide that they can just use this 401k as a personal piggy bank instead of a long term investment? Just like home equity, a 401K should not be a line of credit that people can just use at will.
Just ask any “green” citizen and you know that person will not raid an investment account on a whim. You need to have some untouchable investment(s) to keep the money coming in.
Topics: October 2007 |