A Financial Warmup

Most of us know it is smart to save money for those big-ticket items we really want to buy – a new television or car or home. Yet you may not realize that probably the most expensive thing you will ever buy in your lifetime is your…retirement.

Perhaps you’ve never thought of “buying” your retirement. Yet that is exactly what you do when you put money into a retirement nest egg. You are paying today for the cost of your retirement tomorrow.

The cost of those future years is getting more expensive for most Americans, for two reasons. First, we live longer after we retire – with many of us spending 15, 25, even 30 years in retirement – and we are more active.

Second, you may have to shoulder a greater chunk of the cost of your retirement because fewer companies are providing traditional retirement plans. Many retirement plans today, such as the popular 401(k), are paid for primarily by the employee, not the employer. You may not have a retirement plan available at work or you may be self-employed. This puts the responsibility of choosing retirement investments squarely on your shoulders.

Unfortunately, just about 57 percent of all workers are earning retirement benefits at work, and many are not familiar with the basics of investing. Many people mistakenly believe that Social Security will pay for all or most of their retirement needs. The fact is, since its inception, Social Security has provided a minimum foundation of protection. A comfortable retirement usually requires Social Security, employer-based retirement plan benefits, personal savings and investments.

In short, paying for the retirement you truly desire is ultimately your responsibility. You must take charge. You are the architect of your financial future.

That may sound like an impossible task. Many of us live paycheck to paycheck, barely making ends meet. You may have more pressing financial needs and goals than “buying” something so far in the future. Or perhaps you’ve waited until close to retirement before starting to save. Yet you still may be able to afford to buy the kind of retirement you want. Whether you are 18 or 58, you can take steps toward a better, more secure future.

That’s what this booklet is all about. The U.S. Department of Labor and Certified Financial Planner Board of Standards Inc. (CFP Board) want you to succeed in setting financial and retirement goals. Savings Fitness: A Guide to Your Money and Your Financial Future starts you on the way to setting goals and putting your retirement high on the list of personal priorities.

The Department of Labor’s interest in retirement planning stems from its desire to improve the security of American workers in retirement. In 1995, the Department launched its Retirement Savings Education Campaign. Saving is now a national priority, with the passage of the Savings Are Vital to Everyone’s Retirement Act of 1997 (SAVER). With this congressional mandate, the Department brings front and center the need to educate Americans about retirement savings.

CFP Board also has a keen interest in helping Americans meet their personal and financial goals. A nonprofit, certifying and standards-setting organization, CFP Board exists to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for personal financial planning. To this end, CFP Board authorizes individuals who meet its competency, ethics and professional standards to use its trademarks CFP®, CERTIFIED FINANCIAL PLANNER™ and in the U.S.

This guide shows you the key tool for making a secure retirement a reality: financial planning. It will help clarify your retirement goals as well as other financial goals you want to “buy” along the way. It will show you how to manage your money so you can afford today’s needs yet still fund tomorrow’s goals. It will help you make saving for retirement and other goals a habit. You’ll learn there is no such thing as starting to save too early or too late – only not starting at all! You’ll learn how to save your money to make it work for you, and how to protect it so it will be there when you need it for retirement. It explains how you can take the best advantage of retirement plans at work, and what to do if you’re on your own.

Yes, retirement is a big purchase. The biggest one you may ever make. Yet you can afford it – with determination, hard work, a sound savings habit, the right knowledge, and a well-designed financial plan.

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