FORT WAYNE, Ind. (www.nbc33.com) – A new report says more and more Americans are saving less and less when it comes to their retirement funds.
BankRate.com says 72% of working Americans are either saving as much or less than they were saving last year for their retirement. Financial experts are blaming a "feel bad recovery," which is a scenario best described as being when the economy shows signs of improvement yet consumer confidence is still very low. Therefore people are afraid to save money because the future is still up in the air.
And retirement isn’t the only area where consumers are afraid to save. As financial advisor Todd Larson explains, savings across the board are down.
"It's vital you set aside and adequate cash reserve. That's just a fancy way to say 'stick some money in the bank' so that if things go awry and you come against rainy days, you need a new transmission in your car, you need a new roof, whatever it may be, you have more money to get that from. If not, what you'll end up doing is borrowing from your 401K, and when you do that you voluntarily pay taxes twice on the same money."
Larson also stresses the importance of saving early because it will ultimately pay dividends in the long-term picture.
"The younger you start to save, the longer your money has to grow and so you have a compounding effect. And so if you can start saving for retirement when you're really young it's worth a lot more than waiting until later years. And it costs less to save for retirement if you start when you're young."
It has become a bit of a rarity, but when it comes to contribute to a 401K plan, some employers will match donations. Larson describes this as “free money that is being left on the table” if not taken advantage of.
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