Getting Your Financial Ducks In A Row Rotating Header Image

Are YOU ready for retirement?

Photo courtesy of David Marcu on

Photo courtesy of David Marcu on

In this time of disappearing pensions, corporate downsizing, and high unemployment it becomes a great concern that many folks are still not saving enough for retirement. This may be due to a failure to realistically assess future costs or because we’re spending too much without saving – which is a hallmark of the baby-boom generation. Granted, there are plenty of good reasons why spending is out of control – with healthcare costs increasing all the time, for example. But I suspect that much more of the blame for our low savings balances is due to poor savings habits in the first place.

America’s poor savings habits are actually a crisis, although many folks don’t realize a shortage of retirement funds will affect them unless someone close to them has an age-related or medical condition that forces the family into a financial quandary. The truth is, many folks in retirement can spend more annually on medical prescriptions and basic housing than they earn from their pensions, social security, and investments.

A recent survey found that seven out of ten Americans are more concerned with short- and mid-term financial spending, placing long-term (retirement) savings a distant third place.

The survey further found that about two-thirds of people who unexpectedly retired due to a corporate downsizing or a medical condition indicated they weren’t financially prepared. 60% (of those still working) say they are behind schedule in saving, and the consensus of the survey respondents said that they had a consistent lack of progress toward retirement security since the year 2000. This consensus was the same regardless of age, income, or ethnic background. 70% of those surveyed expect to work at least part time for the first 10 years of retirement in order to supplement income. Plus, over half of those surveyed expressed an extreme lack of understanding of how to choose financial products to meet their long-term savings needs.

A Comprehensive Approach

In order to address these shortcomings, it is necessary to get a handle on all of your potential areas for funding your long-term savings plan – including employer plans, IRAs, social security, long-term care and disability insurance, and even annuities.

By reviewing all of these available avenues, it becomes apparent that the “vehicles” are available, and the question then becomes how to fund the savings plan.

Parkinson’s Law

Welcome to Parkinson’s Law, specifically the Third Principle. For those of you that are not familiar with this principle, the Third Principle of Parkinson’s Law states that expenses always rise to meet available income, and then some. You may also recognize this statement: “It’s always possible to live outside your means”.

The good news is that it can work in reverse, as well.

So – when you voluntarily reduce your “available resources” or expendable income by diverting it into savings, it may be a little awkward and painful at first, but you’ll quickly figure out how to bring your day-to-day expenses into equilibrium. As you accomplish this, you can gradually build up the amount that you divert to savings, accelerating the increase of those accounts.

Where Should I Put This?

Your next concern should be what “vehicle” to place your savings into. As we’ve discussed previously on these pages, the following order makes sense for most folks:

  • 401(k) up to your employer’s match (or other deferred option)
  • Roth IRA
  • Finish maxing out the 401(k) or other deferred plan
  • Your choice – no-load annuities, low-income/high growth stock funds, and/or various forms of ordinary life insurance (no load/low expenses in all cases)


  1. Anne says:

    PS This Staples Coupon Take an extra 50%off any clearance PC.
    In-store code: 74261 is good in store only on Sale PC and sale is over Feb. 14th;
    Get the Free Staples Member Rewards Card @ Staples Store to get “the savings”;
    check the circular; for sales alerts; my 2c Happy valentines Day !!! AR CT US 1951

  2. Anne says:

    “An Example” Staples has this weekly ad:
    Take an extra 50%off any clearance PC. In-store code: 74261
    This means a $1,000 computer reduced to $750 would now cost ” $325″; I see sales like this a lot; the one downfall is “coupons are time consuming; and you have to type the coupon code to your cart to get the savings!!! Worth my time tho’!
    well Spa and Soaps Gift Basket making call to earn more Social Security credits!:)

  3. Anne says:

    Hi Jim: I am realizing more and more savings daily as I follow your and other’s advice; no sense in spending money one does not have to; for example; when buying “big”; like a new computer: I always wait for the Computer company’s Sales!
    If I save $100 on a new computer; this is like getting 5 free disks of new Ink! If one lives in a smaller residence; one saves on “taxes and heating bills”; its a “win-win”!

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