Have you made any changes to your retirement savings due to the poor economy? If you did, you’re not alone.
According to a Financial-Planning.com article, half of America stopped saving for retirement last year. Don’t miss hearing why this is such a bad idea.
Stick around for the listener questions segment where Bret and I address one listener’s worry about the upcoming changes to the tax code. Retirement Starts Today is the podcast where you learn how you can spend more money, pay fewer taxes, and live a better life.
Outline of This Episode
- [1:42] 50% of Americans stopped saving last year
- [6:10] My thoughts
- [8:46] How prepared should I be for the sunset on tax laws in 2026
Pausing retirement savings could cost you more than you think
We all know that the economy took a dive last year with rising interest rates, inflation, and falling stock prices. Therefore, it’s no surprise that many Americans quit saving for retirement to help make ends meet.
What those who paused their retirement contributions don’t realize is how much their lack of savings could cost them.
The article gives an example of a 30-year-old with $50,000 in an employer-sponsored retirement plan. If they continue to save $400 per month then they would have around $920,000 saved by age 65 if returns averaged a conservative 6%.
If that person stops contributing to their retirement savings for just five years, their future balance drops 27% to less than $667,000. This one attempt to increase their monthly income now could cost them a quarter of a million dollars in the future!
Are you optimistic about the future?
Additionally, 32% of survey participants withdrew money from their retirement savings to meet their monthly expenses. Not only are they diminishing their savings, but they also face the added costs to their tax bills from cashing in their investments.
While many Americans are optimistic about the immediate future–60% believe the economy will improve by the end of 2023–they are less optimistic about the distant future. Most people believe that future generations won’t be able to retire at age 65. What do you think the future holds for retirees?
It’s hard to imagine a time when there was so much negativity in the financial news, but it’s important to remember that negativity is what makes headlines. There will never be a clear sign that now is the time to invest which is why it is so important to stick to your retirement savings plan.
Timing the market rarely works. Invest now for the future and your future self will thank you.
Resources & People Mentioned
- Half of America stopped saving for retirement last year amid soaring inflation
- The Retirement Tax Podcast
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