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  • James Veal

7 Top Reasons Why African Americans Delay Funding Their Retirement

1) I Don’t Make Enough Money.

This is certainly true for some people. But I bet you can find #money to invest in if you track your discretionary spending (usually those dollars spent on unnecessary items after paying your bills). Even small savings over a period of time beats not saving anything. The goal should be to increase your savings rate periodically and understand that you do make enough money to do at least a little something.

2) My Employer Doesn’t Match.

The greatest benefit for most employees in a 401(k) plan is not that the company matches or the tax breaks. It is the fact that savings take place automatically each pay period into stocks/mutual funds. Very few workers have the discipline to save outside the plan what they would be able to save through the plan. Even if your employer does not match is not a good reason to not participate in the plan. You have to save for retirement anyway so why not take advantage of your employer’s retirement plan. In fact, the money that you invest in your 401(k) grows tax-deferred so you'll have a chance to build a significant portfolio prior to retirement.

3) I have Too Much Debt.

Set up a budget and stick to it if you don’t have one. Do not continue adding to your debt; get your debt load down to a level where you can contribute at least the amount that is matched by your employer. Focus on the high-interest nondeductible debt first, but it’s imperative that you speak with a professional who can help you create a strategy to pay off your debt and secure enough funds for your golden years. The goal is to enter retirement with zero or small debt obligations.

4) My Job Doesn’t Have a 401(k).

If you work for an employer that does not not offer any sort of retirement plan or if you are self-employed and own a business, you are still able to make contributions to a retirement account. If you run your own shop and have employees, a Simple IRA account may work. If you’re not self-employed, a Roth IRA account is something you make want to take a look at. In these accounts, you should consider automatic monthly withdrawals from your checking account into your #IRA account. Remember, you are sole responsible for your retirement lifestyle. Don’t you dare leave it up to the government or anyone else to fund your retirement. Times have change where most companies no longer offer pension benefits. You are on your own.

5) The Economy is Bad.

Saving for retirement is for the long term, and a down economy is just a part of the business cycle. Even during market fluctuations it is important not to suspend your contributions; instead make sure your assets are #diversified to protect you against market fluctuations. The fact that the economy is bad now should not prevent you from contributing to your retirement, provided you have at least a five-year period before you need the money. Keep investing in your 401(k) at work and spend as little on material goods as you can. They're usually not worth it.

6) Retirement is Decades Away, I Can Wait.

Time is the most critical element of investing. Regardless of how much money you have, it is so important to start as soon as possible with any amount you can. Time is more important than how much you put away, because time has much more of an impact. The sooner you start the greater the amount that will come from investment income. The longer you wait, the more you will have to contribute from your pay later to reach your goal. A dollar today is worth more than a dollar tomorrow.

7) Social Security Will Provide.

Social Security was never designed to be the sole source of retirement funds. It was designed to supplement. Right now the average benefit is $1,503 (2020) a month, which is less than $18,100 a year. That’s right above the poverty line. Is that enough to maintain your lifestyle? If not, contribute as much as you can NOW to your employer’s retirement plan, increase your personal savings NOW, and by the time retirement rolls around, your #SocialSecurity benefits will be a welcome compliment. Over 40% of Americans ages 60 and up rely solely on Social Security for retirement income.

Delaying funding for your retirement is a significant responsibility. Unfortunately, most companies today are gladly dropping pensions obligations to their employees in which now clearly leaves funding for your retirement squarely up to you. That is an extremely dangerous exchange because most Americans are not financially astute and historically horrible savers. With inadequate personal savings and very low investment knowledge, many will rely solely on Social Security benefits in which will be just enough to live beyond the poverty line.

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