Increasingly, Americans are responsible for making their own savings decisions in order to accumulate sufficient resources to retire at the desired age and have an adequate retirement income. But you don't have to go it alone. Here's how to take charge of your golden years with Agemy Financial Strategies.
In our ever-changing world, financial literacy is more important than ever. There are so many ways to learn about money, but what's most important is that you take it seriously and start early!
By learning about personal finance management, budgeting, investing and other financial skills, you're setting yourself up for success in retirement. The earlier you start understanding how money works for YOU, the better off you'll be when you need it.
If you’re looking to become better at managing your finances, continue reading below.
What is Financial Literacy?
Financial literacy is one of the most important assets you can equip yourself with. We believe that financial literacy is a fundamental skill for everyone to have. Financial literacy gives you a better understanding of how money works, how to make good decisions with it, and how to reach your dreams by investing.
However, lacking financial literacy can be damaging to an individual’s long-term financial success. Research shows that 66% of Americans struggle with financial literacy. Being financially illiterate can lead to poor credit, bankruptcy, and other negative consequences.
Why Does Financial Literacy Matter in Retirement?
From day-to-day expenses to long-term budget forecasting, financial literacy is crucial for managing these factors. But when it comes to planning for retirement, financial literacy could mean the difference between a care-free retirement or one you're struggling to maintain.
As Americans approach retirement, we face some common questions. Do we have enough savings? When should we retire? What should we do with our super? And how do we go about building a steady income in retirement?
To successfully answer these questions and solve the retirement income puzzle, you need a good understanding of how the world of super and investment works.
That means you need at least a basic level of financial literacy which, unfortunately, is something many of us lack.
A lower level of financial literacy is associated with:
- Lower super balances
- Lower willingness to take financial risk
- Shorter savings horizons
- Being less likely to set up a retirement plan
- Being less informed about pension rules
- Paying higher investment fees
- Not diversifying pension assets
Source: Retirement Income Review – Final Report, July 2020
Thankfully, there are so many resources available to educate yourself on the world of finance. Continue reading below to see how financial literacy can be improved.
Start a Budget
If you're looking for a financial boost, start with your budget.
Creating a budget starts with an assessment: tracking each category of your spending and determining how much money goes to each category. That way, you'll get to see exactly how much money is going where and what percentage of your income is going into your retirement portfolio.
Once you have this information in hand, it's time to make some decisions: Are certain categories more important to you than others? Is there something that you could reduce or eliminate? Does something need more attention? Are you putting enough cash away and investing enough for retirement?
And then, once you've made those decisions, you'll be able to see the bigger picture and build up your personal financial literacy.
Make Room for Financial Learning
There are some financial concepts that we all understand intuitively. After all, we use them every day: credit cards, savings accounts, retirement accounts. But there are other financial topics that can be more complex.
If you want to be able to make smart investments and feel confident about your retirement planning, it's important to get up to speed on some of these topics. Here are some examples:
- Estate planning
- Personal and business credit
A great place to start is by utilizing free online learning resources, listening to online retirement planning podcasts, reading educational financial blogs, watching financial Youtube shows, and even attending free online webinars from the comfort of your own home.
Making room for an hour each week to go over financial literature can make a huge difference. Afterall, your financial future is more than worth setting aside time for.
Get In Touch With A Professional
Sometimes personal finances require a little more help than you thought.
In a report published by the United States Federal Reserve, almost half of those surveyed did not seek financial advice because they felt they had a decent handle on their finances. Many admitted, however, that they weren’t sure who to ask for help, and others felt that it would be too expensive to hire an expert to assist them.
In an eye-opening survey conducted by the Consumer Federation of America, almost one quarter of the respondents felt that winning the lottery was the most practical way for them to accumulate the wealth needed for retirement! While playing the lottery may be a fun pastime, it certainly isn’t a reliable source of retirement income.
The results of these surveys suggest that many people need help with finances and retirement planning. Chances are that you may be one of them. Don’t worry. You’re not alone!
A qualified Fiduciary financial professional can answer your financial questions and help build your knowledge and confidence about day-to-day money management or more complex long-term financial topics. They can also assess your current situation, help you create a financial plan and get you on the right track for the future.
As we age and our lives change, sometimes personal finances require a little more help than we thought. Maybe you’ve done just fine that way, but now that retirement is (finally) in sight, maybe it’s time to lean on the experience of others. That's where our Fiduciary advisors at Agemy Financial Strategies can help.
We'll work with you to understand your current financial reality, and where you would ideally want to be based on your current age and financial goals. Not sure what your goals are? We can help with those too.
At Agemy Financial Strategies, our goal is to build a community around financial literacy where we can all learn from each other and grow together. Knowledge is power, and if you’re equipped with the correct tools, anything is possible.
Ready to get started on your financial literacy journey for 2023? Contact us today to get your complimentary consultation.