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Financial Regret: Preparing For Retirement

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Financial Regret: Preparing For Retirement

According to Bankrate.com, at least three in four Americans have regrets of a very specific financial nature. 

This is especially true of older Americans, who have whole lifetimes behind them to ponder and regret.

 

Their Number One Regret, of Course, is Not Saving Early Enough for Retirement

The vast majority of Americans will never be billionaires—the financial system simply does not work that way. 

Therefore, a certain amount of saving has to be done if one ever wishes to retire

Yet, a staggering 18% of Americans say that their biggest financial regret is not starting that process sooner.

The numbers are even higher for those who are 65 and up—more like 27%.

 

Multiple Financial Advisers Say to Start Saving for Retirement in Your Twenties

The idea of starting sooner is not so much that you have more time to put in more money, though that can also be the case. 

The secret is in the power of “compounding”—the interest has more time to add to your money. 

Vanguard offers an excellent illustration of this concept:

You start your retirement nest egg at 25, and end up only putting $150,000 in your savings; your friend starts at age 35 and puts twice as much in at $300,000. 

However, when you are both 65, you have $1,058,912 and your friend only has $838,019. 

It seems like black magic, but it’s just the way interest works—that annual 6% return had more years to work on your account, and now you’re a millionaire.

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Another Major Regret is Not Having Saved Enough for Emergency Expenses

Back in December, a Google Consumer Survey found that 21% of Americans had no savings account at all. 

Furthermore, 62% had less than a thousand dollars in their savings accounts. 

In spite of the fact that credit is costly, according to Bankrate, 12% of people say that credit cards are their backup plan instead of savings accounts.

Other Common Financial Regrets:

  • Student loan debt (9%)
  • Credit card debt (9%)
  • Not preparing to pay for your children’s education (8%)
  • Buying more house than you need and can afford (3%)

Forbes Says 21% of People Also Regret Not Having Finished Their College Education

There is already a steep difference in projected earnings between those who merely finished high school and those with a college degree. 

That gives non-graduates something to regret in itself. 

However, there are those who started their college degree, racked up debt doing so, and never finished.

Read more: If you want to lower your student loan payment, click here

Forbes Also Says 19% Regret Letting Their Partner be in Charge of the Money

Apparently, combining finances with a spouse is a regret many people have. 

It raises questions of dependence and control. 

Furthermore, it’s a common bone of contention, often associated with subsequent divorce.

 

In Spite of All the Regret, Bankrate Says that People Are Feeling More Financially Secure Than They Were Last Year

More Americans surveyed say they feel better, not worse, about their current financial situation this year, at a rate of almost 2 to 1.

So Why All the Regret?

It may be that regret over money is simply a part of the human condition. 

For instance, one wouldn’t expect CEOs, executives, or multimillionaires to have any regrets about money at all. 

 

However, Business Insider begs to differ in its article on successful people’s financial regrets:

Jon Stein, CEO of Betterment, Regrets Trying to Beat the Stock Market

He claims that he thought and over-thought, trying too many complicated schemes and even investing in Enron. 

He regrets the lost money but also regrets the lost time with family and friends.

 

Sallie Krawcheck, Chair of Ellevate Network, Regrets a Job She Was Rushed Into

She was drawn in by a CEO, who promised to stay for a full two years to help her learn the ropes. 

The transition was rushed, her requests to meet coworkers in advance were denied, and her financial agreement was extremely informal. 

Naturally, the CEO ditched her within a few months, and the job was a financial disaster.

 

Scott Adams, Creator of Dilbert, Let His Bankers Manage a Portion of His Money.

Three words:  Enron and WorldCom.  Said bankers are no longer managing his money.

 

Conclusion:  Everyone—rich, poor, and in-between, has their financial regrets. 

But one of the biggest of all is not preparing well enough for retirement

Everyone wants—and arguably deserves—to live out the latter part of their lives in comfort and dignity.

So start saving now.  Especially if you’re twenty.  Compound interest is black magic, and it will work for you.

 

 

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