According to a recent Allianz Life’s Chasing Retirement Study, half of those saving for retirement are “Chasers” who are behind on their retirement goals. They worry they can't catch up if they don't increase their savings rate soon.
Chasers are defined as those who are saving but have either fallen behind on where they should be, wish they could accumulate savings faster, or worry that if they don’t increase savings soon it will be too late to have a comfortable retirement.
More than eight in 10 (85%) Chasers feel they have fallen behind where they should be in saving for retirement compared to just 4% of non-Chasers, and the same percentage worry it will be too late for them to have a comfortable retirement if they don’t increase their savings soon (versus 2% for non-Chasers).
It should be noted the study was conducted by Allianz Life Insurance Company of North America, a company with a horse in the race so to speak,
[Allianz is] helping Americans achieve their retirement income and protection goals with a variety of annuities and life insurance products.
Allianz's press release covering the study implies that Chaser's would benefit from the assistance of a financial professional,
Chasers are less likely than non-Chasers to say they are currently working with a financial professional. Only 39% of Chasers are currently working with a financial professional, compared to over half (53%) of their more confident counterparts. “Working with a financial professional can help Chasers understand how they could take on more risk, yet still have protection in their portfolio,” said Paul Kelash, vice president of Consumer Insights for Allianz Life.
I agree working with a qualified financial professional can help, especially if you are behind and you are worried about your financial situation in retirement. No reason to worry though, educate yourself.
I believe it is important to learn as much as you can about basic financial planning for retirement. If you do decide to meet with a financial planner, you'll be prepared with your specific financial information and you'll have a list of questions specific to your financial situation. Also, an initial meeting with a financial planner is usually at no cost to you. You are evaluating their potential services and might meet with more than one before making your selection.
Prepare for the meeting in advance by gathering and organizing your financial information. In addition, spend some time reading books and financial articles/blog posts on financial independence and retirement planning. This process in itself will reduce your stress level. It will also help you realize there are dozens of things you can do to "catch up" with your savings. Consider some of the ways others are spending less and saving more:
Track Your Spending Habits: just seeing how you spend money on a daily basis helps to reduce wasteful spending. We use Mint.com to track our bank accounts, credit cards, and investments. It is free to use the service online. Mint.com allows you to easily categorize your spending and better understand your finances all in one place. It is also a helpful tool for preparing for a meeting with a financial planner, whether you choose to hire one or not.
Yard Sale: at least once a year, my wife and I have a yard sale. It seems we have an endless supply of things we no longer use that are gathering dust in our house, attic, and garage. Over the last few years, we've made a few thousand dollars selling stuff. Thousands more to go LOL.
Income Producing Hobbies: Turn your hobbies into income producing activities following the "Rich Dad, Poor Dad" tactics. The Rich Dad spends time on hobbies that pay for themselves and/or produce income. The Poor Dad spends money on hobbies. For example, if you love pets, sign-up for Rover and offer pet walking, sitting, and/or boarding services for your neighbors, friends, and those within a few miles of your home. Many folks are making $500 or more a month doing so. Sign-up for Rover here and get a $20 bonus on us.
Ask for a better deal: Years ago, I realized how much I could save just by asking for a better deal. It has done wonders for my wallet. I look at it this way, I have the choice of either taking a $100 bill out of my wallet and giving it away or I possibly can put a $100 bill into my wallet, if I just ask. Thinking of it like that, and visualizing a $100 bill in my mind, has helped me be less reluctant to ask. And, once I realized I had many more $100 bills in my wallet just because I asked, I always ask now.
One question I almost always ask the salesperson is, "Is this the best possible price I'll find for this item/service?" The salesperson often senses he or she might not close the deal if they are not honest. I've been shocked at how often I get a better deal just by asking this one question. It doesn't work every time, but it works more often then you might think; always ask.
Cut Wasteful Spending: there are numerous ways to increase your savings by cutting wasteful spending. For example, review and re-negotiate your bills; cable TV, insurance, smart phone(s), utility bills (energy efficiency, programmable thermostat, timers on lights, LED light bulbs, etc.), and so on. We increased our savings by:
- eating out less (inviting friends over for dinner instead),
- going out with friends for desert instead of dinner,
- cutting our spending on groceries (meal planning),
- reduced our spending on landscaping/gardening and things for the home,
- reduced our phone bill by not buying new phones after our 2-year contract ended,
- shopped less at department stores and now shop mostly at discount stores that sell high quality products at a discount (throw away the advertisements received in the mail and unsubscribe from email promotions),
- implemented the Latte Factor which is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to your savings (I haven't been to a Starbucks in over a year),
- regularly get new credit cards that pay sign-up bonuses and more cash back for groceries (6%) and gas stations (3%); we make over $1,000/year per card on average, and
- regularly move emergency fund money to increase our return by signing up for online savings accounts that pay sign-up bonuses.
I'm an advocate for basic financial education for everyone! Once you educate yourself, you won't end up a "Chaser" and you'll more than likely worry less. It isn't hard to get back on track to retire in comfort.