Not Saving Only Spending

I just read an article in the Wall Street Journal regarding US savings rates. It showed how we used to save almost 8% annually.

Over the 1990s that amount declined down to 1%. Now through the 2000s it is -1%.

As we continue to spend more of our our money we earn and save less it is going to be very difficult on Baby Boomers looking to retire. If you are spending more than 100% of your take home pay now you will never be able to retire.

We, us need to get a handle on our spending and attempt to pay down our debts (mortgages, cars and credit cards).

When I worked in the finance field we assumed people would need about 70% to 80% of take home pay. I feel this amount will be too low for many people. Social Security only pays someone about $1,500 a month right now. Don't expect that amount to increase that much over time. On average it has increased about 1% to 3% a year.

My recommendation to everyone is pay down your debt and then start saving money in your work 401k plan or IRA or Roth IRA if you qualify.

In the future taxes will most likely to increase, but if you have eliminated most of your debt it probably won't effect your standard of living in retirement.

LESSON: Develop a plan to eliminate as much debt as possible over the next two to three years. Following a simple plan could eliminate a lot of your credit card debt