How Not to Have Money for Retirement

By Dr. Glenn Mollette

2019-2020 Federal Reserve SCF data shows us the average retirement savings by age in the U.S.
• Ages 18-24: $4,745.25
• Ages 25-29: $9,408.51
• Ages 30-34: $21,731.92
• Ages 35-39: $48,710.27
• Ages 40-44: $101,899.22
• Ages 45-49: $148,950.14
• Ages 50-54: $146,068.38
• Ages 55-59: $223,493.56
• Ages 60-64: $221,451.67
• Ages 65-69: $206,819.35

How can you grow money for retirement savings? Three men were talking at a morning coffee shop table. One said, "I hope someday I can just strike it rich." Another one said, "I hope I can win the lottery." Another got up to leave the table saying, "I'm on my way to work, that's my only hope."

You can't count on winning the lottery, or someone leaving you a lot of money from their estate. However, you can count on these two principles to grow your retirement fund - work and save your money. Work a job that pays money. Put some of that money aside every paycheck into a savings plan.

Can you imagine if you had started saving money at a younger age, where you would be today financially? If a 25-year-old would put $6,000 in a Roth IRA account every year then by the age of 55, at a 7% rate, that adult would have over $600,000 saved.

Even saving $6,000 a year from the age of 40 to the age of 65 will give you a nice sum of over $400,000 at the same rate. Yes, five years makes a significant difference in compounding interest. Even if you can only save $1,000 a year the accumulation will be over a $100,000.

A Roth IRA is a good way to save money. You have already paid tax on the money you are putting into the account. The money grows every year and when you start withdrawing the money out of the account after age 59 1/2 you don't have to pay taxes on your withdrawals.

Traditional IRAS are fine too but you are delaying your tax responsibility. You avoid the tax today to pay it later when you start withdrawing from your IRA.

Education should begin early. Parents should teach children to save money. A child can save for a new baseball glove, dress, bicycle or car. When we save our hard-earned cash and have to spend it on something we want, the value of the purchase increases. We know how hard it is to save every month and then to release that entire savings on a purchase. If you have saved $40,000 to pay cash for a car and then write that check to pay for it, then the purchase kind of takes your breath away. You greatly value what you bought because how hard it was to come up with that money and how long it took to save that much.

If you are the ATM for your children and just instantaneously meet every need they have, they will never truly value what you have bought them. If they have to save some money and put some effort into the purchase, they will have a totally different respect for the expenditure.

We realize we can't take money with us when we die. Money is only for this life. Money is for caring for you and helping others. If you don't spend it all there are plenty of people, a church or charities you can leave it to who will enjoy it when you are gone.

Saving money is a weekly or monthly choice. You don't have to but if you don't, you won't have any.

Dr. Glenn Mollette is a graduate of numerous schools including Georgetown College, Southern and Lexington Seminaries in Kentucky. He is the author of 13 books including Uncommon Sense. His column is published weekly in over 600 publications in all 50 states.

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