Waiting Too Long To Save For Retirement

The Cost of Waiting to Save

First Published Date : March 7, 2011 ADawnJournal.com

As more and more people spend more and more of their money each year instead of saving for retirement, we are seeing a growing number of people who have no money for retirement, or are putting money away too late. This is a serious problem and it means that the retirement age of 65 could be moving up to 70 as many couples have trouble quitting working and living off the meager money they have saved over the previous few years.
The longer you wait to save, the more money you are going to have to save each year. If you are a late starter for retirement, you could see large portions of your income going towards paying for your impending retirement. For example:

·    If you earn more than $100,000 and you do not save for retirement until the age of 55, you will end up paying 40 per cent of your income towards saving for retirement to catch up on what you need.

·    If you earn more than $80,000 and you do not save for retirement until the age of 55, you will need to save 37 per cent per year.

·    If you earn more than $40,000 a year and do not save for retirement until the age of 55, then you will need to put aside 27 per cent of your income to have enough money for retirement.

This is why it is so important that you start putting money away very early on because it will allow you start putting small amounts away that will grow over time. If you put $2,000 away every year in your 20s, you will have $20,000 saved by the time you are 30. If you then put $3,000 away every year in your 30s, you will have $50,000 saved by the time you are 40. At this point, you can probably start putting away more, because you will usually be making more. That means, you can put away $5,000 a year until you are 60 and you will have saved a total of $170,000 totally since you began saving money at the age of 20. That is just a quick example of how easy it is and it does not figure into the interest you gain, any investments you have and more.
Saving just a bit of money from the beginning can really help but if you don’t, you need to be prepared to sell items you don’t need, cut back on expenses and put away a large portion of your income towards saving money for retirement. You do not want to be 70 and still working because you did not save for retirement. Too many people are in that situation and you do not want to be one of them so do not let it happen to you. Begin saving now and if you don’t, make sure you put as much as you can away once you near retirement age.

NB – All figures shown above are for illustration purposes only and may not be accurate.

Should You Rely Only On Your Pension?

Relying  Only On Your Pension

First Published Date : March 20, 2011 ADawnJournal.com

Many retirees, along with saving a bit of money, rely heavily on their pension fund to finance them during their golden years. However, is this really a good idea? If the recession has taught us anything it is that pensions are not always a safe. Many investments were made, with allegations of fraud, which caused pensions across the United States to be completely lost.

This should show you that pension plans are not always safe and you should look at finding alternatives to making sure you have enough money when you retire. Do you really want to put all your eggs in one basket with your retirement? No you don’t. What should you do to ensure you don’t just rely on your pension?

The first thing you should do is start saving from a very early age. If you start saving when you are 20, then you can have a lot of money. Save $2,000 every year from the age of 20 to 65, you will have saved $90,000 easily. That is if you never add anything else to your savings. If you increase the amount you save every single year by 10 per cent, you can end up saving a lot of money.

The next thing you can do is to make your own investment portfolio. Do not rely just on your pension fund portfolio because you really don’t have much of a choice about what it is invested in. Before the financial crisis, pension funds only invested in AAA rated stocks, which were considered very safe. Turns out, many bad investments got AAA ratings and when everything collapsed, many lost their entire pensions. So, you should make your own investments because you have control. You can ask questions, you can make the decisions and you can ensure what you invest in is safe. Having an investment portfolio and a pension portfolio is not out of the ordinary. It is quite common and many who did this ended up weathering through the financial crisis much easier than others.

As you get closer to retirement, begin to cut your expenses as well. Sell that other car, pay off your mortgage early, sell anything you don’t need. Doing that can free up some extra cash, even thousands of dollars worth, that you can put in your retirement fund.

When you retire, you will also find that you suddenly have a lot of time on your hands. You can use that time to your advantage by pursuing hobbies that will make you money. If you are good at leatherwork, make some products that you can sell at farmer’s markets. If you are good at painting, make it a hobby that can bring in money for you. In the years leading up to your retirement, practice your hobby so you can hit the ground running once you retire.

If you are going to rely on your pension fund only, you are taking a big risk. This is why you should always have some backup plans in case you suddenly find your pension is gone one day.

How to Choose A Place to Retire

Choosing A Place To Retire

First Published Published Date : May 4, 2011 ADawnJournal.com

When you are approaching retirement age, there is a chance that you will want to move. This is often because your family has probably moved away, your kids are out and you may want to have some change of scenery. If you live where it snows, you may also want to spend the rest of your days in a nice warm location like Florida.

Of course, when you are choosing a new place, or state, to move to in your retirement, it is important you choose right. Choosing wrong could make your retirement anything but enjoyable and you could find your money slipping away because you made the wrong choice for the place you are going to spend your golden years.

To help you make the right decision, here is are some things to keep in mind for your retirement.

1.    Climate: You want to be in a place where the temperature and weather is normal so you don’t have to worry about severe storms, shovelling snow and more.

2.    Economics: You want to live in a place where the cost of living is normal, the tax burden is minor and there is not a high amount of unemployment, just in case you wanted a part-time job to supplement your income.

3.    Life Expectancy: You want to live in a state that has a high amount of people living well into their old age.

4.    Crime: You want to feel secure, so moving to a place with a high crime rate is probably not something you want to do. You want to find a place where there is little crime so you can feel safe in your golden years.

So, what are the best and worst places to retire? Well, according to TopRetirements.com, these are the choices you have in the USA:

The worst states are (2010 edition):

50. Illinois

49. California

48. New York

47. Rhode Island

46. New Jersey

45. Ohio

44. Wisconsin

43. Massachusetts

42. Connecticut

41. Nevada

The reason Illinois is the worst state is because it does not have a high amount of economic action going on and it has had to borrow money just to fund the pension obligations of the state. That is not a good sign. In addition, there is no security income or tax pension, which is something many retirees rely upon heavily.

The best states are(2010 edition):

1. Florida

2. North Carolina

3. Tennessee

4. South Carolina

5. California

6. Arizona

7. Texas

8. Colorado

9. Oregon

10. Delaware

Florida has the warmest winters in the United States, there is no income tax and there is a high amount of property tax protection, which is very important for retirees.

You will also notice that on both lists, you have California, this is because the best list was based on visits to the state retirement guide of TopRetirements.com, while the other list is based on certain criteria. The biggest plus for California though was the climate.

So, where are you going to retire to spend your golden years?

How To Save Money In Retirement

Saving Money In Retirement

First Published Date : October 28, 2010 ADawnJournal.com

As you get older, you are going to want to think of ways that you can save money in retirement. Saving money is very important because you will not have as much of an income coming in and you need to prepare for a lot of costs, including medical. While you may have a lot of money in the bank, that does not mean you should spend it without thinking.

So, how can you save money in your retirement so your savings go a long way?

1.   First, you need to determine how much money you need each year. This should include your insurance costs, travel costs and the cost of day-to-day activities.

2.   Calculate how much money you have coming in from investments, your pension, your tax-deferred income like IRAs and more. You will need an income that equals about 75 per cent of your current pay, which means that if you made $100,000 a year, then you will need $50,000 to $75,000 a year.

3.   Keep in mind the rise of inflation, which can vary between one to five per cent per year. The money you have now will not go as long of a way as it will in 20 years.

4.   Talk with a financial planner about how much money you are going to need and ways that you can make your retirement savings grow over time. The financial planner will cost you money, but it will also earn you and save you money.

5.   Cut back on anything you do not need to spend money on. Go through your expenses and determine what you can cut back on. This is very important to do because you want to save money anywhere you can. If you do not need a second car in retirement, then sell the car and put the money into your retirement funds. Do you need the house you have or can you move to s smaller one?

6.   You should also determine ways that you can bring extra money in. This does not include your investments or pension, but doing hobbies that will earn you money. If you enjoy working with clay, wood or stone, then you can make things that you can sell at a market. It is something you can do to fill your spare time, which you have a lot of, and you are not working a full time job.

When you want to save money in retirement, you need to determine what you can cut back on, where you can make money and how you are going to live. Retirement is not like the rest of your life when you are dealing with money coming in at a regular basis. You do have money coming in, but it will not be as much money as you are used to, and that means you have to make adjustments in your life to meet that new requirement within your life. Retirement can be fun, you just need to know how to manage it properly.

Tips for Saving For Retirement in Your Later Years

Later Years Retirement Saving Tips

First Published Date : July 18, 2010 ADawnJournal.com

In a perfect world, we would all save for retirement early but life has a way of getting into the mix and changing things around us. Sometimes it can be difficult to make sure you put the money away that you need to for your retirement years and it is not uncommon for an individual to save for their retirement but do so in their 40s and 50s.

If you are in your 40s and 50s and you do not have much in the way of retirement savings, you can follow these tips to start saving in your later years:

·    Look at how much you spend and live on right now and then determine how much you will need per year in your retirement. If you spend $60,000 per year on all your bills, mortgages, debts, etc, then when you retire you will probably spend around $30,000 since many of your debts will be paid off. That means on average from the age of 65 to 85, you will need at least $600,000 saved up. Now that you know how much you need, you can start saving.

·    Look at your retirement savings plan like the Canada Pension Plan and 401(k) and determine how much you can contribute per year to help you reach your goal.

·    Talk with your employer and see if they can contribute to your retirement plans as well, and find out what the pension from your employer is like.

·    Start looking at ways that you can save money with your life at this point. Maybe downsize the home you live in, sell one of your cars, start cutting back in any way that you can. The more money you save now, the more you will have to put away for retirement. If you are able to save $10,000 per year from the age of 40 to 65, you will have saved $250,000, which is an excellent sum and almost half what we calculated you would need at $30,000 per year post retirement.

·    Probably the most important thing you can do to save for your retirement in your later years is to get yourself out of debt. When you are in debt, you are paying money every month and it can amount to a lot of money. Therefore, work to pay off your debt in the next five years and you will find that the amount you can save will triple or even quadruple. Do you want to save $10,000 per year or $40,000 per year?

Retirement is something we all look forward to but not all of us save for it. When we are in our 20s, retirement is the last thing we are thinking about but as we get closer to our 50s, the looming retirement begins to come into our sights and we need to start thinking about saving for it. You can save enough money for your retirement in your 40s and 50s; it just takes a bit of work to do it.