Protect Your Ability to Save
The working years before retirement are the prime time to earn and save. No matter if you're 25 or 45, you have the opportunity to create a comfortable, enjoyable future. But what if you experience setbacks and are unable to work due to unforeseen circumstances? Although preparing for retirement takes effort, you can glide smoothly over potential hurdles by preparing for them.
Common Pitfalls to Saving
Everyone experiences moments when saving seems impossible. For generations X and Y, this concept may stem from youth-based principles:
"I'm only young once. I can save later."
"With school bills, a mortgage and a family to feed, how can I be expected to save for the future when I barely make ends meet?"
Although older generations have a historically better savings rate than their younger counterparts, today's baby boomers are not immune to setbacks:
"My adult children are asking for money. How can I say no?"
"I've had to dip into my savings to pay for health care. I can't think about the future right now."
How to Cope
Financial pitfalls can influence your savings habits and goals. According to a study by the Center for Retirement Research at Boston College, single adults (ages 50-60) with work disabilities experience a 42% reduction in wealth, compared to 16% for married couples.* Situations such as this can make it difficult to save, but an interrupted savings plan doesn't always spell trouble. Here are tips for staying on track if hurdles come your way:
Start saving early. The earlier, the better. The more money you've saved, the less vulnerable you'll be to financial setbacks. There isn't a one-size-fits-all formula for saving. Contributing to an individual retirement account (IRA) is a popular option because it offers tax benefits.
Stay healthy. Poor health is one of the greatest threats to retirement saving. Hospital bills can eat up a large chunk of your funds. You can help keep yourself in tip-top shape by eating well, exercising and scheduling regular exams with your physician.
Expect the unexpected. If you're sidelined by a serious illness or accident, you can help protect your savings through insurance – particularly health and disability insurance. Insurance may not seem necessary if you're young and healthy, but could save you thousands of dollars if the unexpected happens.
Thinking Ahead
Protect your ability to save. This may sound like a challenge but with some foresight and determination, you can make it work. For information about opening or contributing to an IRA, contact a service representative at Chaco Credit Union. Seeking the expertise of a financial advisor may also help you reap the rewards of saving.
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