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Saving for Retirement Now

One of the biggest buzz words of the modern financial market is retirement and saving for retirement. While some make retirement look scary or even impossible to fully prepare for, there are simple steps that a person can take to ensure that they have a comfortable base when it does come time to retire.

Financial advisors and retirement professionals will be able to give specific suggestions on what investment plans one can build their retirement on and what different strategies they can use to build up their retirement savings. But the one piece of advice that almost all of these professionals will give to their clients is to start saving for retirement now.

Never Postpone Saving For Retirement

Making up for lost time is one thing, but when a person chooses to postpone their retirement savings for a later date, that later date seemingly never comes and leaves the person struggling greatly to build up their retirement savings. People postpone their retirement savings plans for a wide variety of reasons, but the one reason that seems to be the most common is that people believe that they simply do not have the money to start saving for retirement.
While tight budgets are certainly something that most people deal with, this does not mean that they are by any means easy to handle. But even with the constraints of a tight budget, people can and should find the money to begin their retirement savings.

You Can Find Savings, if You Know Where to Look

Almost every individual can find the beginnings of their retirement savings if they know where to look. And by finding these beginning funds of a retirement plan, an individual will be able to start saving for retirement now, which will greatly help them down the road of life.

Finding the first funds that one can put towards retirement can be a difficult task, especially for those who are living paycheck to paycheck, but with honest and careful consideration, each individual should be able to find some small portions of their assets that they can put towards savings. For many people, this initial fund for retirement may come from money that would otherwise be spent on going out to eat for lunches throughout the work week.

Going out to lunch while at work is perhaps the best place for individuals who are striving to find some startup funds for their retirement savings. Going for a quick bite while on the lunch break at work is not an inherently bad thing, but when a person realizes how much they spend on eating out at lunch they can easily see how cutting back could benefit their retirement funds.

Pack Your Lunch, Save for the Future

Choosing to pack a lunch for work rather than eating out every day or even every other day during the work week can save an individual thousands of dollars over the course of just a few years. In fact, if a person can cut out just eight dollars per week each week over five years on the money that they would be spending buying lunches for that week at fast food restaurants or other popular eateries, that person could save upwards of two thousand dollars.

While two thousand dollars may not seem like much as far as savings go, it is certainly a step in the right direction for those who are striving to save for retirement. With just eight dollars per week coming off the restaurant tab and going towards savings a person can save two thousand dollars for their retirement, but if that same person could save even more from their eating out budget, or from other areas of their budget like entertainment, that same number of two thousand could easily be doubled by simple and small means.

By carrying out simple saving plans that can be enacted each week, a person will find that they are able to save much more than eight dollars per week. With cut backs in personal spending on such things as superfluous clothes, shoes, and entertainment costs, a young person who believes they simply do not have money to save could find that they actually have large stores of funds they can save every year.

In fact, if a person or a couple can save just twenty dollars per week to set aside for retirement, they will be able to save over one thousand dollars in a year. Here again, one thousand dollars may not seem like much, and truly is not very much money when it comes to living costs after retirement, but year after year this number can build and it can be started right now at almost any point in the life of a person planning for their retirement.

Planning the Perfect Time to Retire

Many look forward to retirement their entire careers. Nothing sounds better than being able to rest again, especially since you spend so much of your time between 20 and 60 not resting. If you’re one of those people, consider the following so you can plan perfectly for that blissful day.

Reach full retirement age for your Social Security

Your social security is best taken out later rather than sooner. It turns out that every year you delay retiring; the more you get back from social security in the long run. Here’s how it works.

The “full” retirement age according to the U.S. Social Security Administration is over 65. The exact age is dependent on your year of birth. Anyone born in 1960 and later must wait until 67 to reach full retirement age. To see where you fit in, check out the Age to Receive Full Social Security Benefits page on ssa.gov.

That said, the minimum age to start receiving Social Security is 62. If you retire at 62, your total monthly benefit amount will be reduced by about 30 percent. The closer you approach your full retirement age, the more you’ll receive.

63 will diminish it by 25%. 64 by 20%. 65 by 13.3%, and 66 is 6.7%. When you reach 67, you become eligible for full benefits. In addition, you become eligible for higher monthly checks the longer you wait after you reach full retirement age.

Maybe these percentages don’t mean much to you now, but consider the following deficits in yearly incomes. Consider the example of a hypothetical 61-year old woman making $55,000 a year.

If she were to claim her benefit at 62, she would receive about $15,400 a year. If she were to delay that by four years (to her designated full retirement age), then she would receive about $20,500 a year. Wait a further four years and she gets $27,100 a year, not to mention how much she saved from the extra eight years of $55,000 a year. The jump from $15,000 to just over $27,000 is usually worth the time.

You’ll want to at least delay retirement until 67 to maximize your full potential in regards to social security. The added benefit of delaying until 67 will be that you are able to earn more throughout those years, as well as save more, abolish debt better, and possibly even further your career that much farther. So wait if your situation allows it.

Wait for your 401k to fully mature

The money in your 401k is yours. That said, it may not have fully matured or become “vested.” Your company has likely signed an agreement to match your contributions for a set amount of time. If this is the case, then you likely won’t have full access to your 401k until that time frame is complete.

Pay off your debts

The last thing you want to take into retirement is a mortgage, car payment, or other forms of debt. Debt will hurt you more than you can imagine. Retirement comes with a reduced, fix income. In most cases, it doesn’t nearly afford you the comfortable spending habits that you’re used to. Adding debt to that reduced income is a form of suicide. Strive to have all of your debt paid off before you retire so you have nothing left hanging over your head.

Prepare a plan to stay busy

As blissful as retirement sounds, many fall into depression after a few years. When you’ve spent your life working, you can only take sitting still for so long. You want to be doing something, but there’s nothing to be done. Money is coming in and your life is taken care of. Yet you still lack that sense of fulfillment that comes from working every day.

Bring meaning back into your life with plans. Volunteer at a hospital. Get involved in the community. Spend a lot more time with your family. When all is said and done, returning your life to a busier state will help you to be happy throughout the experience. The happiest in retirement are those that stay busy.

If you plan properly for your financial and mental health, then you’ll find yourself enjoying the bliss of doing what you want to do, when you want to do it. You maximize your freedom in retirement, even if it means that you have to stick around a job for a few extra years to make it happen. You’ll never regret that sacrifice. You’ll only ever regret jumping into it without preparing for these four concerns.

Simple Things You Can Do to Improve the Finances of Your Family

We all know that being a parent of a family can be difficult. No matter how many kids you have, trying to stay involved in the lives of, and pay for your children can be stressful and difficult.

One of the main things that is difficult about raising and maintaining a family is that families are expensive. Any new mother or father could tell you how expensive and time-consuming babies are.

And as your children grow older, they are still expensive, if not more expensive. You’ll find yourself needing extra money as children become teenagers, they start wanting cell phones, laptops, and the latest fashions in clothing and eventually college tuition.

As a parent, it may seem like you are spending all of your money on your children. None of the money you are earning seems to be going towards yourself.

Save For Retirement Now

Here are a few things you can do in order to improve the state of your family’s finances. The first thing you can do is begin saving for your retirement now.

It may seem difficult, or perhaps even impossible. You’re barely making enough to cover your bills each month and pay your car and house payments!

However, starting to save for retirement now rather than later is always going to be a good idea. The more money you put aside each month, the more money you will earn from your bank through interest.

You may not be able to set aside money for retirement every month. But for the months where you have extra, make a goal to start setting that money aside.

Time is on your side right now, but it won’t always be. That’s why deciding to start saving for retirement is essential right now.

Sometimes parents feel selfish when they use their time, money, and energy saving up for their own retirement. They feel guilty because they think they should be spending that money on their children, rather than themselves.

Although this is an altruistic feeling, keep in mind that you are doing your children a favor by saving for your own retirement. By saving for your own retirement, you save them from having to pay for you in your old age.

You know your children would hopefully never leave you high and dry, but they certainly could be using their money towards their own children and families. Setting aside money for your own retirement now will be beneficial for both you and your children in the long run.

Take Time to Assess Your Finances

Another thing you can do to improve your family’s finances is to have a 10-minute quiet time every day, or a few times a week. Take this time to take a deep breath and relax.

Sometimes we let certain stresses build up in our heads. We worry about them almost constantly; day in and day out, until these worries become much scarier and more threatening than they need to be.

During your 10-minute quiet time, take a moment to reevaluate what state your family finances are in, and what you’re doing to make them stable and healthy. If you’re in panic mode about your finances, take action to get out of panic mode.

Take to whomever you need to talk to. This could include a financial advisor, your spouse, or your parents.

But the only way to stop worrying is to either accept uncertainty about the situation or do your best to fix what problems you can control. Another great way to improve your family’s finances is to do a short, fun project with your kids to help them learn about budgeting and managing money.

Teach Your Kids The Basics

If you have younger kids, you can talk with them about currency and the value of saving money by having them cut out and color dollar bills. You can even glue their faces onto the bills for an extra element of fun.

If you teach your children about money and the importance of saving money often when they are children, these lessons will stay with them for their entire lives. It is likely that you remember quite well what your parents taught you when you were young, and those lessons have stayed with you and have affected how you think about and manage your own money in your adulthood.

One of the most important things parents can do is to make sure their children know that they will love them no matter what. Even if they do not manage their money well, their parents will still love them.
Make sure to instill this attitude of love in your home. This, coupled with education and knowledge, will create a healthy home environment. And as always, remember that getting your family finances on the right track is a process and there there will be months where you come up short. If you find yourself in that situation remember that Check City is there to help you get through those tough times with cash advances, payday loans, or even title loans.

Tip of the Week: The Sooner You Start Saving, the Better

For the tip of the week this week we’re going to cover a topic that seems like it’d be common sense but according to a number of studies that have been done recently people are still not taking this common sense tip to heart and for many of them, the penalty is working well into their “Golden Years”. The tip is simple; the sooner you start saving, the better. That means no matter what age you are right now, you need to start saving for retirement.

Start Saving

According to a recent Washington Post article Teresa Ghilarducci, the director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research said that, “This is the first time that Americans are going to be relatively worse off than their parents or grandparents in old age.”

That simple fact should be enough to kick the younger generation into gear. Experts are now saying that if you’re not starting to save for retirement by the age of 30 you’re already behind. Kevin Luss of the Luss Groups says that, “If you start at age 30 you have to put 10% of your income away as a benchmark. If you start at 45 you have to put 50% of your salary.” While it makes complete sense on paper it’s the real world application that becomes difficult for younger people.

With the current status of the economy and the rate at which college and university tuition’s have inflated most 30 year olds are more worried about the mountain of student loan debt that they face along with the fact that there aren’t as many jobs available as they thought there would be as they worked tirelessly to earn their degrees. All of this goes without mentioning the fact that most 30 year olds are starting to give at least some consideration to settling down with that special someone and starting a family. Combine the expenses of student loans with starting a new family and setting aside 10% of your income can be incredibly difficult to think about.

So what are the best options to start saving?

401k Plans

While there has been some debate in recent years as to whether or not 401k plans are still a viable means of saving for retirement but financial experts are still recommending that the 10% that you save each year should be going into your 401k. There are several reasons for this, one being that you’ll be less tempted to remove the money from a 401k and the other huge factor is that a lot of companies offer a matching program for a portion of the employee’s savings, if that’s the case with your employer you should at least make a goal of setting aside the maximum amount that your employer is willing to match, for example if your employer is willing to match 3% then you should shoot for that same amount.

Stick With an IRA

While starting to save money when you’re young is a great move there are also some downsides. If you start to save when you’re 30 you’re more likely to take higher risks or to continuously chase the best stock. By always chasing the hottest stock rather than slowly and steadily setting aside savings you may end up finding yourself worse off than when you started and several years behind the curve. Rather than chasing hot stocks it’s recommended that you set up an IRA because the money can go tax free until you are 59 ½ years old and you can start with as little as $50. If you set up your accounts to deposit $50/month you’ll be shocked to see how quickly your IRA will grow.

There are hundreds of ways to save for retirement; the key is just to start soon. If you play your cards right now you will set yourself up for a much more comfortable retirement several years from now.

Planning to Live on a Fixed Income

Estimates show that you will need 70-80% of your current income to sustain your current lifestyle after retirement. That means that if you’re currently living on $50,000 yearly, your retirement plans should give you at least $35,000 – $40,000 per year. Do you have solid plans to secure an income after retirement? Will you be able to maintain your current lifestyle on 70-80% of your current income? If you haven’t considered these aspects, consider them now.

Retirement plans

401k – A 401k is a retirement savings plan made possible through your employer. You set up a contribution plan with your employer to pay a certain amount of money from your paycheck into a retirement plan. The government limits the total annual contributions to $17,500 a year. Taxes are deferred from this money until money is withdrawn years later.

A catch-up provision is available to help people over age 50 catch-up to where they should have been years ago. There are limits to “catching-up” too. In 2011, that limit was $22,000. 2012 showed an increase to $22,500. That number could increase in 2013.

This money has rules and limits attached to it. For example, your account owner must begin distributing the money from their accounts after turning age 70 and ½ or April 1 of the calendar year after retiring. The requirement takes effect on whichever of these comes later. You can also be forced-out of the plan if your account if your balances are too low. Most plans have a force-out provision allowing you to be removed for these purposes. The current limit is $1,000. Just as long as you keep the limit above that amount, you can keep your account.

You may be wondering why that would ever be an issue. How could you ever drop below that limit if you’re just depositing money? It turns out that you can take loans from your 401k when you need them. Taking out too much in a loan can drop your balance below $1,000, putting an automatic force-out into effect.

The name was created based on the law labeled 401(k) in the IRS tax laws.

Simple IRA Plan – A simple IRA plan stands for Savings Incentive Match Plan for Employees. This plan acts as a tool to set aside money and invest it for retirement. The difference here is that investments are made separately and privately, unlike the 401k (which is a profit-sharing plan).

It still goes through employers. They must meet certain criteria to be considered “eligible” to take part in a SIMPLE IRA plan. An employer must employ no more than 100 employees to qualify. If the business established an IRA in its infancy and grows past that number, they have 2 additional years to continue using it, but then are kicked out.

Annual contribution limits are $12,000 for people under the age of 50, and $14,500 for people age 50 or over. As of 2009 and 2010, the catch-up limit was $25,000.

Like the 401k, it is a tax-deferred plan (meaning you are responsible for less when tax season comes around again).

Social Security – Simply put, everyone in America pays a certain percentage of their income to social security with every paycheck. That money goes to help the current retired population that needs a source of income to survive.

The benefits of social security is that the money your follows you no matter where you work. Just as long as your money is contributed, you build credits for your social security throughout your life. All you have to do is be a working American to receive this benefit.

Credits are received every time you earn $1,120 (in 2010; the total changes annually). You get a max of 4 credits every year. You become eligible to withdraw from social security once you receive 40 credits (if you were born after 1929.

You contribute to Social Security on income below $113,700 a year.

Social security is the hot topic of debate right now. A lot of people are worried that there won’t be a social security system by the time the baby boomers are done with it. The baby boomer population is retiring right now. This is the population of children that revitalized the youth of America. They have led the country for years now and are ready to call it quits. With such a large population retiring and a relatively smaller number of people left in the working force, people fear that the account will run dry. Whether or not it lives or fails though will be determined in the coming years. That is the big risk with not pursuing a traditional 401k or Simple IRA.

Other retirement plans include the 403(b), SEP, payroll deduction IRAs, profit-sharing plans, money purchase plans, various other governmental plans, etc. If you’re interested in learning more, talk to your employer or do some more research on the internet to find a plan that will work for you.

Not enough can be said about saving your own money to ensure you have something to tidy you through (especially since there is the possibility that your plan will run out before you die—if you live a long life).

You can increase the amount you save personally every year by practicing money saving techniques now.

Live below your means

You can start by learning to live below your means. Not just within them, but learning to only use 75% of your income for your necessities. Save 25% of your income for non-necessary expenses. You can divvy that money into savings/travel/hobby money as you see fit. Living like this will (1) build up a savings account with every paycheck, and (2) teach you how to live once you do retire.

Say you earn $50,000 a year. Saving 25% of that every year for 20 years will give you $250,000. Work for 40 and you’ve got half a million to use on top of your retirement plan. Even only saving 10% of your total income will give you $200,000 at the end of 40 years. Every little bit helps, especially as kids begin caring for themselves.

Living below your means will help you create disposable income that could be used to bring fun, enjoyment, and security to your family. That skill will transfer to how you spend your money post retirement.

Never buy anything on impulse

Too many purchases are made on impulse. Candy bars, movies, and sometimes TV’s and cars are bought on impulse. They aren’t needed by any means, but they mean just a few more dollars out of your bank account. Say you made an impulse purchase of $5 every week for 40 years; you would spend $10,400 on things you can’t remember anymore. Learn to shop with a purpose and avoid buying things on impulse as often as possible.

Get out of debt before retirement

Debt combined with high interest rates can be detrimental to seniors. They spend so much of their needed income on expensive mortgages. Do your best to take care of these debts while you’re still contributing to your retirement funds (not withdrawing from them). Everything works better when you’re debts are all paid going into retirement.

Also try not to get into debt once in retirement. Cut up credit cards. Don’t take out a loan for a car. Avoid debt at all costs.

Downsize life

A great way to reduce debt is to downsize your house, car, and other property. Once the kids are gone, you won’t need a house with 3 or 4 unused bedrooms. Keeping the place clean is a nightmare and takes you forever. Downsize into a more manageable size. Let a newer family use the space like you did. It’s true that the place hold memories, but your kids are the epitome of those memories. You will have a house for your needs and can relive your memories when your kids come by to visit. You got a bigger house for the size of the family. Readjust when it starts to shrink again. It’s a normal part of life.

Eat healthy

Now this tip can actually cost you more throughout your life, but eating healthy has wonderful consequences that make the price you pay worth it. The human body was built to function properly on a healthy diet. Just like a car, the better you take care of it, the longer it will run and the fewer problems it will give you. Getting into a habit of eating healthy now will extend your strength, health, and life.

Practice living on a budget

Living according to a budget is still the best way to ensure you spend your money wisely. When you practice a tight budget throughout your working years, it will be a no-brainer when your income is cut by 20-30% annually.

If you haven’t already, look into your retirement plans and get those moving. You can never start too early to prepare for retirement. Also begin learning how to spend your money wisely. Downsize when necessary, live below your means, save as much as you can, eat healthily, and practice living on a budget. These are all habits that will help you do well in retirement.

 

Start Planning for Retirement Today

Boost Your Retirement Savings

Struggling with your retirement planning? With the economy booming, it is a great time to start thinking about your future and your retirement. Aside from the retirement plan you pay into at your job, what else can you be doing to have a financially comfortable retirement? We are here to give you some different options and 4001k alternatives to help you start planning for retirement.

Save, Save, and Save

There are many different ways to plan for retirement, but first we would like to introduce you with good old saving! You can do a lot for your financial future by putting aside a set amount of money every pay check. Put it in a savings account that you will not withdraw any money from. This is more than just your “save for a rainy day account.” This is a “save for the rest of your life account” and you will need to treat it as such. Consider a separate account that will help pay for those rainy days so your retirement savings can continue to grow.

Start saving today so you can start planning for retirement.

Consider an IRA

It is yet another way to save your money in another account. If you go for a “Roth IRA” you can have the added benefit of not being taxed on this money when you get it out of your account. Adding a Roth to your retirement plan can add diversity and another level of stability to your assets.

It is always important to contact and talk to professionals before opening a Roth IRA. Make sure it is right for you!

Maintain Asset Allocations

Just because your initial asset allocations were working does not mean they will continue to do so. If you don’t keep track of your asset allocations, you could be investing your money in poor returning investments. By doing this, it will really help you start planning for retirement.

Invest in Stocks

Stocks are one of the most common and best ways to start planning for retirement. Stocks are a great way to increase your savings over a long period of time. They can mature faster than savings accounts will, allowing you to make money at a quicker pace.

Stocks can be a great investment. However, it’s important to be aware of volatility in the market and act accordingly. Know the level of risk, and plan accordingly. If you cannot afford the risk, do not invest in risky stocks! Talk and meet with professionals before investing your money into stocks.

Invest in Bonds

Bonds are a dependable investment for your portfolio. Bonds are can be less volatile than stocks and can grow your money in a steady way. If you are looking to increase your investment in a less risky manner, bonds are a good consideration.

Talk to a professional before investing your money into bonds to see if it best fits your needs and interest.

Insurance

Insurance is a great way to ensure a nest-egg for your survivors. You can purchase a permanent insurance policy; if you’re married you can also purchase survivors insurance. Insurance ensures that your survivors will be taken care of. As said before, speak with a professional to see what insurance best fits your needs.

There are a multitude of ways to begin planning on your retirement. If you start now and invest smart, you can start feeling secure about your financial future. Start planning for retirement today! Thanks for reading.

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