The need to save

Today, people know more than ever that they need to save for retirement. For the first time, probably ever, we have the situation where people who retire do have to then take up employment of some sort to be able to live, yes live. For sure this has always been a possibility for anyone who didn't have a pension in their job or simply spent like crazy and didn't save at all, but now the value of our savings are a key issue combined with the one major factor - that we are living longer.

Passing the message down the age chain?

If we have made a mistake and don't have enough money in retirement that is one thing; but we don't want to have this happen to our children and grand kids do we? So what are the four key reasons why we don't save for retirement because if we know these we can use this knowledge to inform our kids. It may not make them any better but it should wake them up to the dangers going forward. Over to them then!

Four reasons why people don't save for retirement.

These are not the only resaons and once you have read them the immediate reaction may be - so what do we do about it. Let's look at these reasons:

1. There is no plan or view or visualization of what retirement is. If we don't know what retirement is then we may wish to spend now instead of saving for an uncertain future.
2. Due to our culture, over the past three decades, instant gratification means we buy now regardless of the debt levels. We buy a house, it may be bigger than we really need, but it sure is nice isn't it? We buy that flashy car because it is great and looks better than the neighbours. A bit tongue in cheek really but you get the idea?
3. Anyone who has a family will be going through the two decades of having to spend to support them, and even beyond into University. This is a huge drain on disposable income and is getting bigger - hence less savings.
4. During our life time the period between the age of 35 and up to 45 is a period when we are most likely to overspend regardless and this leads to a debt level which we find very difficult to reduce before retirement.

So what to do about this?

Before anyone tweets that I am advocating no kids the answer is absolutely not. The key point here is point number 1 above. You should visualize a retirement scenario and once this is soldified work to financing it. If we have a plan say to retire to xyz country, which will require a new home, language, life style support etc then we can set out to achieve this because we have a goal. It becomes something tangible that we can save for just like that holiday next year. Notice the key word save for. Something we were told to do by our parents but we didn't always do because we didn't have to as credit was cheap and most of all easy to get. This my friends is no longer the case. So we need to plan and save - right?