Do You Have a Plan for Your Savings Rate?
October 26, 2009
When a recent poll by MoneyRates.com and GetRichSlowly.org showed that 52% of respondents felt their retirement savings were not on track, it wasn't a complete surprise. This has been a challenging environment. A weak job market has caused many household incomes to take a hit. The stock market has been little help to investors for a decade now. Meanwhile, low savings account interest rates and other bank rates make it difficult for conservative depositors as well.
For all the difficulties, though, the most important thing now is to plan for how you will save for retirement. Even taking into account any setbacks to date and the low level of current bank rates, it's time to come up with a revised plan.
That plan may involve a more modest retirement than you had originally envisioned. Or, it might require more sacrifices in your current budget. Either way, when times are tough, it is an especially bad idea just to let things drift.
Time can be both the friend and the enemy of retirement savers. The sooner you start saving, the better the ratio you'll have of years spent saving to years spent living off those savings in retirement. On top of that, of course, is the power of compounding. Once you start saving, the interest you earn starts contributing alongside your future savings, and that contribution from compounding snowballs with each passing year.
In short, given recent conditions, it's understandable if you've fallen a little behind on your retirement plan. However, that simply means you need to get started on a plan to catch up.