Americans in ever-growing numbers – regardless of age, income or other demographics - are taking a “Scarlett O’ Hara” approach to accumulating debt and saving for retirement: they won’t think about that today, they’ll think about that tomorrow.
Such thinking may have worked for the fictitious “Gone With the Wind” heroine, but in real life it’s setting many Americans up for a declining standard of living when they stop working. According to new research by HelloWallet:
"Debt savers” are people who are running up debt faster than savings for their golden years, which won’t be so golden if they’ve spent their money before even partially getting through them.
HelloWallet’s research shows that 60% of American households are accumulating debt faster than retirement savings. Some 20% are growing their credit card debt faster than they’re putting money aside for retirement. Debt savers are actually paying more than they think because finance charges are added to their debt, digging them deeper into the hole.
The expectations of debt savers – that they can have what they want now and consider the retirement consequences later – are positioning them for a lifestyle shock.
To download the full copy of HelloWallet's Research, click here.
How do you change your ‘debt saver’ ways? Practice tough love. On yourself.
- Establish a budget that pays down debt and puts away money for retirement and stick to it!
- Just say no to things you want but can’t afford. Regardless of what the TV commercials say (“You deserve it”); if you can’t pay for it, don’t buy it.
- To help accomplish both, see a financial counselor or accountant and let them help you reach your goals.
The Retirement Savings Contribution Credit can also help turn things in a positive direction. Basically, If you or your employer make eligible contributions (defined later) to a retirement plan, you may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). This credit could reduce the federal income tax you pay dollar for dollar.
In our next post, we provide detailed information on the ins and outs of the Retirement Savings Contribution Credit, so stay tuned!
In the meantime, if you have questions about how to make the Retirement Savings Contribution Credit work for you, click here to contact the Rodefer Moss office nearest you.
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