Ahhh, optimism. It’s a quintessentially American trait. We’re optimistic — and confident — about the economy, the markets, job growth ... the list goes on. We’re also confident about our own financial futures. But when you dig into the numbers, it’s possible we’re too optimistic. Here are some some hacks that allow you to continue to maintain that sunny outlook while actually doing the right thing for your financial future.
Nearly half of Americans have no retirement savings at all.
Nearly half of Americans have no retirement savings at all.
1. Retirement Savings
Perception/Reality: In 2016, 21 percent of people were very confident that they’d have enough money to retire comfortably, and 42 percent somewhat confident, according to the retirement confidence survey from the Employee Benefit Research Institute. We’re also feeling more confident that we’ll be able to afford both basic expenses and healthcare expenses. The reality is, nearly half of Americans have no retirement savings at all. People age 55 to 64 have an average of $104,000. Those 65 to 74 have an average of $148,000. If those amounts were turned into an income stream (using an annuity) to supplement Social Security, it would be roughly $310 and $650 a month. Not enough.
Try These Retirement Savings Hacks:
- See it. Visualization is key in inspiring you to save more. You don’t want to be putting money away for some amorphous future, but for something specific. A picture of the place you want to live — specifics on when you want to live there. And, visualizing yourself older is key, too. The you of today don’t know the you of 30 years from now, so it’s hard to empathize with her. Trying to see yourself older can help.
- Measure up. Research has shown that peer pressure — seeing where you fall in relation to people your age, at your income, in your area — can help inspire you to do more. You can ask people around you, there are also plenty of comparison tools online.
- Compartmentalize. Mental accounting is a behavioral finance phenomenon that shows we tend to be more successful savers when we know which dollars are targeted to which goals. Consider allocating the amount you earn in 1 hour of each day — the first hour — for your future.
2. Emergency Savings
Perception/Reality: According to a new Bankrate survey, more Americans are feeling comfortable about the amount they’re saving than feeling uncomfortable. Yet, we’ve actually lowered the amount we’re saving over the past 12 months according to the same survey. And 66 million Americans have no emergency savings at all.
Try These Emergency Fund Hacks and Apps:
- Digit is an app that links to your bank accounts, uses a smart algorithm to figure out how much you can afford to save and then moves the money into savings. The average user saves between $80 and $170 a month — and there’s overdraft protection so it’s not going to cause you to not have enough money for a bill. It has recently come under fire for charging $2.99 a month for usage, but new users will receive the service free for the first 100 days. And customers will earn a 1 percent bonus on savings, which could make up for the fee, depending on how much you save.
- Acorns links to your checking and credit cards and then rounds up purchases to the nearest dollar and invests the difference. It’s kind of like the old Keep The Change card. So, if you spend $1.15, it’ll round up to $2 and invest the other 85 cents. Once you hit $5, the site puts the money to work. The fee is $1 a month until you hit $5,000 — then it’s ¼ of a percentage point.
- TipYourself again links to your accounts it operates like a virtual savings jar. So, the idea is that you’ll come up with a system and each time you do something, you pay yourself. For example, every time you complete a workout, you could tip yourself, or if you walk to work rather than driving. It works best if you can make it habitual.
3. A Will
Perception/Reality: The odds of dying soon are pretty low. Only about 824 in every 100,000 people die each year. So, perhaps you can be forgiven for being confident you’re not going to die this year. But, everyone dies sometime. Which is why it’s not understandable that only 44 percent of Americans have wills — and that the percentage is on the decline. In 2005, it was 51 percent.
Try These Hacks to Get Your Will Done Faster:
- Do it with friends. If you are of the age where you’re having kids, generally you are in a social circle where that’s the norm. Gather a few couples together and talk about the fact that you’re all going to do this. Then hold each other accountable. Peer pressure in a case like this is a wonderful thing.
- Schedule it. Make an actual appointment with an attorney to have a will drafted. A basic estate planning package, including a will, costs anywhere from about $500 to $1500 depending on where you live. Productivity experts have shown blocking out time to do something assures it will actually get done.
- Bribe yourself. One common time that many people choose to have a will done is before they get on an airplane (that’s when I did my first one) without the kids. Make getting a will part of the conditions upon which you’re able to go on vacation.
4. ID Theft
Perception/Reality: According to a survey from Blumberg Capital, 60 percent of Americans believe they’ve never been a victim of cyber hacking — or don’t know if they have. In fact, it’s the opposite. 60 percent have been victimized. Every day, more than a million people are victims of cyber crimes. (And even when we’re not victims, a survey from Centrify, shows that 25%of people forget their passwords at least once a day, which can lead to yelling, crying and tantrum-throwing.)
Try These Hacks to Keep You Safe from Hackers:
- Verify. Go to the website haveIbeenpwned.com type in your email address. It’ll tell you if you’ve been part of a breach in the past. Before you leave, sign up for alerts that will tell you if you’re part of any breaches in the future.
- Use a password manager. Dashlane, KeePass and LastPass are all good ones. Understand, every password manager will take some setup. So start with your critical accounts — bank accounts, Paypal, medical records, social media — first. Then, as you have time, migrate to other accounts as well. Once you’re done you only have to remember the password to the password manager.
- Or increase password length. These days, the failsafe is 12 characters not 8 — a combo of letters, numbers and symbols. As you look at it, it shouldn’t read like a word. Or, even better, pick four words at random and then string them together. Mathematically, that’s a very hard password even for a machine to crack.