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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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The Psychology of Saving: Increased Knowledge Leads to Bigger Nest Egg

Americans understand that they need to save for retirement, but psychological factors undermine logic

Americans know they need to save more for retirement, but psychological, sociological and economic factors prevent them from doing so.

Americans are less confident than ever that they will be able to afford a comfortable retirement, according to the Employee Benefit Research Institute. More than 25 percent of workers say they are “not at all confident” they will have enough money for retirement, and 29 percent say they have less than $1,000 in savings. More than half – 56 percent – say their savings and investments not including their primary home – are less than $25,000.

“There is certainly a socialization process involved in savings, and one’s attitudes towards it,” said Teresa Neal, a University of Phoenix faculty member.

A number of factors play into an individual’s savings rate, particularly gender and level of financial knowledge, said Neal, noting that investors who feel confident in their financial knowledge are more likely to prepare for retirement.

“Enhance your financial knowledge,” she advises. “If one has developed savings habits and has learned how to spend and save wisely, those behavioral patterns are more likely to be enduring.

“There are gender differences, as well,” she said. “Men, in general, are more concerned with financial and practical matters, while women are more concerned with cultivating friendships.”

Psychological factors are further impacted by the Recession and slow recovery, said Neal, explaining that “currently, our economic condition is affecting traditional models of savings.”

The Recession has affected the financial attitudes and behaviors of most investors, from Main Street Americans to mega-millionaires, according to surveys conducted in December by Spectrem Group. The Recession has motivated investors to reduce their debt and increase their savings, but it has also forced some investors to take early withdrawals from their retirement accounts and delay their retirement.

More than 10 percent of mass affluent households – those with a net worth of $100,000 to $1 million (excluding primary residence) – took from retirement savings last year, Spectrem found. Ten percent have increased their debt and 5 percent have a member who has come out of retirement.