Financial Literacy Track Preview: Denise Smalls- Income or Wealth?

How many of you are working for income or wealth?  What is the difference?  Income is today and wealth is tomorrow.  One of the ways to accumulate wealth is to start saving for a retirement fund.  Are you currently saving for retirement?  If so, are you saving enough to retire comfortably?

According to the Retirement Confidence Survey, only 66% of workers have saved money for retirement.  These numbers go down significantly for workers who make less than $35,000/year (24%).  A number of people live for today and handle tomorrow when it gets here.  However, these are the same individuals who do not have enough money to pay for both medical and housing expenses.  Are you depending on Social Security to help you with tomorrow?  What happens if social security changes the way it provides funds in the future?  Could this change reduce the amount of money you will need to live on tomorrow?  Let’s say that Social Security does not change and you will receive the same amount that a retiree is getting today, is that enough to live on?  Why don’t you go ask a couple of our seniors who are currently living on Social Security alone and find out how comfortable they are living?

Saving for retirement is a good first step but you have to do more.  You have to determine how much money you will need to save before you can retire. More than 50% of workers, according to the Retirement Confidence Survey, do not know how much money they will need to have to retire.  It is equally important to know if you are on the right track with your retirement goals.  How will you pay for medical expenses?  How will you pay for housing and food expenses?  Do you want to travel or visit your potential grandchildren?  Do you want to spend time playing golf, tennis or bingo?  Do you want to volunteer or work part time?  There are so many decisions that have to be made and while you can’t foresee the future you can definitely plan for it.

There are numerous calculators on the Internet that can help you make a determination on how much money is needed for retirement.  One such calculator is from CNN Money http://cgi.money.cnn.com/tools/retirementneed/retirementneed_plain.html and AARP also has a good retirement calculator http://www.aarp.org/work/retirement-planning/retirement_calculator/

For more information on retirement and other money management questions, feel free to come to the Money $ense classes where we speak about the above issues as well as how to build and/or fix credit, how to get a free credit report, how to create a spending plan and what are the advantages of using a financial institution.  The class schedule is located at http://www.goodwillcfl.org/services.php.  Go to the bottom of the page for financial programs and select Money $ense class schedule.

Are you working for income or wealth?  Why don’t you use the income you are making to achieve the wealth you want?  How do you accomplish this goal, come to the Money $ense class to find out.

Employee Benefit Research Institute. (2013). Preparing for Retirement in America.  2013 RCS Fact Sheet #3.  Retrieved from http://www.ebri.org/files/Final-FS.RCS-13.FS_3.Saving.FINAL.pdf

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