Preparing Financially for Retirement

Once you start to get closer to your middle age years, your thoughts start to turn to retiring when you can look forward to spending your day engaging in your hobbies, travelling about the world or just doing nothing if that is what you want.

You look forward to not have to answer to the demands of an alarm clock waking you each morning so you can get ready for a day of work. According to recent reports however, the retirement dreams of many are disappearing and they find that they will have to work for longer than they thought before they can afford to retire.

The reason that many people will not be able to retire at as early an age as they anticipated is because they are deep in debt. If they choose to retire, even with a pension, their income will not be enough to allow them to live comfortably, paying their essential living expenses and making the monthly payments on loans and credit cards. Economic statistics tell us that millions of men and women who are of retirement age are still in the work force –not because they love working, but because they can’t really afford to retire.

Today’s working men and women in the 55- 65 age group owe about ten times as much as people of the same age owed a decade ago. The average person in this group owes about £2500 in personal unsecured debt in addition to mortgages, car loans and other secured loans on which they have to make monthly payments.

According to the group “Help the Aged”, which supplies these statistics, this debt may not seem to be overwhelming, but for those facing a lower fixed income in their retirement years, it is a greater amount of debt than they are able to manage.

Debt is not the only reason that more and more people are finding that they have to continue working longer than they anticipated a few years ago. The economic downturn that has hit all parts of the world has resulted in increased prices of food, petrol, home heating and clothing costs.

These people find that if they do have enough money to get by on, they have nothing left over for leisure and want to have something extra to add to their enjoyment. Plus, they are trying to save some money for a rainy day just in case they find themselves out of work or for that vacation they are planning on taking when they do retire.

The generation of people now approaching retirement age has grown up with the convenience of credit card usage. They feel that they have lost their best friend if they do not have a credit card with them. Businesses too, have added to this attitude because it is next to impossible to book a hotel room without one.

With the popularity of Internet shopping, the use of a credit card is essential. However, credit card use has led many people into debt because of impulse shopping when they buy something because they like it and not because they need it.

With dependence on buying on credit and then making monthly payments that include high rates of interest, people have to spend years paying for something rather than saving up the money they need to make the purchase with cash. The practice of making monthly payments has also made it next to impossible to save any money for the future because there is very little money left after all the bills are paid to put into a savings account.

Financial management when young can ease the burden of debt when you get older giving you investments and savings on which you can rely for your retirement. In this way you can look forward to retirement as a time when you can start living your life as you wish. The fact is, though, that most people today who are able to retire see their golden years disappearing because they can foresee that it will be a time of worry about finances for them.

Even those who have been saving for years and have had retirement investments are not so sure of the amount of money they have available to them. The losses in the stock market have wiped out many investment plans in terms of the interest gained and many people are only left with the amounts of their initial investments if they did put them into guaranteed funds. Those who invested in companies that have succumbed to the global financial breakdown are now without this savings on which they were dependent as their retirement income.

The depression that we now find ourselves in is perhaps a wake up call to many that we have been overspending and relying on credit to the detriment of retirement needs.