Do you know how much money you need to retire? How do you save $100,000? Those are the kinds of questions you’re likely to hear as a national consortium of financial institutions, nonprofit networks, educators, government leaders, employers and others promote America Saves Week Feb. 21-28.
Saving in the United States peaked at 12 percent of disposable income in the mid 1980s. That number dropped to 1.4 percent in 2005, said Atlanta economist and certified public accountant Emily Sanders, and that was before the real estate crash. Today, it is back up to 3.9 percent.
That is well below countries like France (13.5 percent) and Sweden (14.5), but a vast improvement over where we were even a year or two ago.
“We are saving more for a rainy day,” Sanders said. “And, it’s not as easy to get financing. If we start saving more, that’s a good thing for consumers in the long term, but it hurts [economic] recovery in the short term. If Americans spend less, government picks up the slack to inject more liquidity in the economy.”
How quickly the economy bounces back is an uncertain. Individuals, however, can start now mending the fragmented finances in their own homes.
Saving is no longer an option, said Bruce Fleet, author of “The Solomon Secret: 7 Principles of Financial Success from King Solomon, History’s Wealthiest Man.”
“If you don’t save and you have financial stress, it destroys your life, ruins your health, ruins your mood, and can ruin your marriage,” Fleet said. “I’m not overreaching; you are less productive as a family member, a worker, a member of your church or synagogue. If it’s that destructive that means we were never meant to be in debt.”
Fleet provided tips to get you on the path to saving, and to saving more:
– Call everyone you send a check to. “You need to be wise, be proactive, and call every one of your creditors at least once a year,” he said. “Call cellphone companies twice a year. They will never call you and say, ‘We just figured out a way you can save on your bill.’ ”
– Pay off debt. “When you pay off debt, you are saving. If you’ve already dug yourself a financial hole, a credit card is a shovel. Every time you use it, you’re digging a little deeper. The only benefit of a credit card is that it allows you to buy things you can’t afford.”
– Contribute to your 401 (k). “If your company has a match, it’s free money.”
– Don’t deprive yourself. “It’s like a diet; if you deprive yourself, you’re going to be miserable, you’re going to suffer and it’s never going to work.”
– Spend less. “Get what you want in a wiser fashion.”
The answers to those earlier questions: It will take $620,000 for a 65-year-old male and $665,000 for a woman of the same age to have $50,000 a year with no other source of income. To get to that $100,000, begin by automatically depositing a percentage of your pay into a savings account.
“Take the steps to save and do it,” Fleet said.