The Key Factors Of Financial Retirement: Financial Shortfall

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Retirement: Financial Shortfall
Most everyone has to ask themselves at some point in their life if they are ready to retire. There are many factors that come into play to answer that question but the biggest factor for most people is financial readiness. In 2010, Forty-four percent of U.S. workers had not saved an adequate amount to retire at the normal age for full Social Security benefits, according to the Survey of Consumer Finances (SCF) model target (Pang, Warshawsky, & Watson, 2014). The SCF compares the actual household savings, expenses, and other retirement benefits with the survey targets to make this determination. What are the contributing factors that cause U.S. workers to be ill prepared financially to retire? This paper is
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There are so many conflicting expenses that individuals put retirement as a low priority. Those in their 20’s do not consider retirement as an immediate need in comparison to their current income/expense ratio and they feel they have plenty of time to save. As we get established in our day-to-day lives other expenses are made our priority, such as buying a new car, home, or the expense of having kids (Olson, 2014; Sharf, 2014). Before we know it we are in knee deep in life the number of years we have to save for retirement is limited making it a much bigger hurdle to save the required amount to retire comfortably, if at all (Sharf, 2014). For example, if a 25 year old saves $2000 every year until they are 65 they will have personally invested $80,000, but if a 45 year old wanted to accumulate the same $80,000, they would have to save $4000 every year until they were 65. This is just basic math and does not even take into consideration the compounded rate of return on that money invested. If the rate of return were five percent annually, the 25 year old would have approximately $267,759 when they retire but the 45 year old would only have $149,490 even though both individuals personally invested $80,000. Stuart Ritter, vice president of T. Row Price Investment Services made the following statement before new employees “There will always be more things you want to …show more content…
Americans need to stop procrastinating and make retirement savings a priority early in their career. They must take an active role understanding investment options and learn how to calculate what they will need to retire. The more they learn the less overwhelming it will be for them to take the necessary steps to secure the funds needed to sustain their lifestyle at retirement age. Until that happens, we will continue to see the dream of retirement vanish for many

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