Many people don?t have enough money to retire.
While for the most part local residents have invested wisely throughout their lives, a study conducted by the AARP last year of working adults over the age of 40 indicates that 31 percent have not saved any money for retirement. Even worse, 52 percent of the people questioned indicated that they have less than $25,000 in savings and investments.
Of all adults, the ones who are planning on scraping by with the bare minimum might be in the most danger. The AARP?s study indicated that during the last five years, 10 percent of employers eliminated a traditional pension plan, 9 percent froze or reduced plans, 15 percent changed a traditional plan to a defined contribution one, and 44 percent cited reduced health care benefits. With the latest numbers from the U.S. Census Bureau indicating that the average Baltimore household makes about $63,000, it is important that Baltimoreans make the most of that money.
“We believe that all Americans should have peace of mind about their long-term financial security,” said Tiffany Lundquist, associate state director for communications for AARP Maryland.
The Better Business Bureau encourages everyone to get a jump start on savings. The organization?s online tips page encourages saving and invest wisely not only for unexpected events, but also to create a nice nest egg for the future. One of the most important steps to smart financial management is creating a budget. While sometimes tough to stick to, by keeping track of income and expenses, it becomes painfully obvious where money is being wasted, the BBB suggested.
Suggest amounts to save also vary. Many financial experts will advise their customers to put aside about 5 percent of their after-tax earnings each year, the BBB indicated. Two other popular ways to invest include IRAs and Money Market Deposit Accounts, the Internal Revenue Service indicated. Typically, an MMDA requires a deposit of about $1,000 and has a higher interest rate than a savings account, but it can vary, the BBB said. As for IRAs, the general appeal is that income deposited is tax-exempt until the money is taken out at maturity.
More information
» www.aarp.org/money/financial_planning
» www.bankrates.com
