You might be looking forward to retiring in peace, but there is plenty you need to do to prepare before you can get to that stage. One of the most important stages of your preparation is the financial side if things, and there is more than one way you can save for your retirement pot. There’s certainly nothing wrong with having a credit card and utilizing its rewards program properly, as long as one doesn’t take on more debt than they can handle.
One survey, however, finds that rewards programs are more popular than retirement savings. And that’s troubling trend, since such a savings vehicle can prove much more financially rewarding over time than a rewards program tied to plastic, revolving debt.
ValuePenguin reports that 61 percent of U.S. households are enrolled in at least one credit card rewards program, while only 58 percent have money in a retirement savings product.
“The points, miles or cash back users collect can be used after just a few months or years of use,” writes Robert Harrow, for ValuePenguin. “Retirement products have no credit requirements, and not nearly as much risk. But individuals must have enough income to comfortably set some of it aside. Unlike credit card rewards, consumers who use retirement products will not reap the benefits for many years—in some cases, decades.”
ValuePenguin also reviewed major U.S. cities and how they rank in retirement savings vs. credit card rewards programs. Miami has the lowest retirement savings rate out of the 100 cities studied, with only 39% of households there having a retirement savings plan. Just 10 cities save more in retirement plans than use credit card rewards: Oklahoma City; Tulsa, Oklahoma; Indianapolis; Plano, Texas; Lincoln, Nebraska; Louisville/Jefferson, Kentucky; Omaha, Nebraska; Fort Wayne, Indiana; Little Rock, Arkansas; and Des Moines, Iowa.