Saving is hard work. Between making the right choices about your 401(k), deciding about other savings methods, and covering expenses for healthcare, insurance, and simply daily living, it’s no wonder many out there planning for retirement in the Costa Mesa area are feeling less than confidant. The annual Charles Schwab 401(k) participant survey[1] elaborated on this theme with some data, finding that 40% of participants view saving for retirement as a significant financial stress, and fewer than half (44%) say they’re confident in making 401(k) decisions on their own.
Retirement knowledge and retirement confidence go hand in hand—the same survey states that 74% of participants would be confident making 401(k) decisions if given access to the help of a financial adviser. But what are the specific reasons we’re lacking confidence in our retirement planning? To get a better idea, we can look at the common hurdles to retirement saving that the survey participants expressed. The percent next to each entry indicates the percent of participants who selected the answer as a major hurdle.
Still paying off student loans – 17%
An important step in achieving financial independence, eliminating debt is obviously a priority. If you are like some, however, you may view this particular debt as less of a priority. Certain companies that manage student debt offer a variety of payment plans and deferments that may go far in making the repayment process more comfortable; always keep in mind, though, that every dollar that goes toward interest on that loan is money that could have been invested elsewhere. Know your rates, and how much you’re losing to interest so that you can make an informed decision on how aggressively to pay back your loans.
Having medical bills to pay – 19%
This is a broad topic, as there are many types of medical bills, and a huge amount of possibilities in how to address them, making professional advice a huge benefit. One general principle to consider is that saving for retirement is really something that can only be done when you have a regular income, while there may be options for paying off medical bills after retiring.
Paying off credit card debt – 23%
This incredibly common hurdle to retirement savings can be tricky. APR on credit cards can be high, making it a priority to get rid of that debt as soon as possible. If you’re finding it difficult to pay more than the minimum payments on your debts, you may want to revisit your budget to see if there is a way to pay them off more aggressively.
As the study indicates, enlisting an advisor could boost your confidence level dramatically. The three “hurdles” to saving we mentioned above aren’t insurmountable. Everyone retires—but some people planning for retirement in the Costa Mesa area may just need a confidence boost. Give us a call at Miramontes Capital. It’s our job to take our clients from simply retiring to retiring with confidence.
[1] Moore, Rebecca. “401(k) Participants Want Help With Retirement Savings Decisions.” Plansponsor.com. Aug 10, 2016.