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4 Simple Ways to Save Enough for Retirement

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4 Simple Ways to Save Enough for Retirement

Odds are you’re one of the nearly 60% of Americans moderately or very worried about not having enough money for retirement. Regardless of your age, profession, income or social status, a desire for retirement savings continues to top seemingly every personal finance poll. The question is: what simple things can you do to calm your nerves and instill the confidence you need as retirement approaches?

Stop Refusing Free Money

Recent data suggests as much as 80% of companies who offer retirement plans also offer to match employee contributions, up to an average of nearly 5% of each employee’s pay. Effectively, that’s a 5% bonus every single year just for contributing enough to meet your employer’s match program. Ask your Human Resources contact if you’re eligible to participate in your company’s retirement plan. Stop refusing free money!

Max Out Traditional Retirement Plan Contributions

If you are to have any any chance of saving enough for retirement, you need to save much more than the minimum to meet your employer’s match. For most traditional workplace retirement accounts, the 2014 maximum contribution was $17,500. If you contribute most, or all, of the maximum consistently year after year, you’ll be well on your way to a robust retirement

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For self-employed workers and non-traditional retirement accounts, check with your financial advisor for annual limits to be sure you’re maxing out in compliance. You do have a financial advisor, right?!

Assuming you’re 30 years old, make $75k per year, plan to retire at age 65 and earn 6% rate of return in your 401k, the below chart shows effect on your bi-monthly paycheck and the monumental difference between just contributing to get the match versus maxing out the $17,500 allowable.

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Bankrate.com 401k Calculator

    Go to BankRate.com’s 401k Contribution Calculator to customize your own scenario.

    Tax-Advantaged Savings

    Contributing to traditional retirement accounts is fundamental, but what if your contribution limits are too low to allow adequate savings? Or what if you’re concerned about the taxes you’ll pay down the road on the traditional retirement account income?

    A healthy retirement plan should include tax-advantaged savings like a Roth IRA, if you you qualify. Tax efficient investments like municipal bonds may make sense for a conservative portion of your savings. An often-overlooked savings vehicle, perfect for tax-advantaged retirement income, is a cash value life insurance program.

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    Cash Value Life Insurance may not be a good fit for everyone but the tax-favored savings accumulation, flexibility and death benefit are attracting more and more savers, especially young professionals.

    Protect Your Savings

    If you’ve followed the nuts and bolts of saving for a healthy retirement listed above, you will be in good shape. If you’re truly a saver, protecting what you’ve worked so diligently to build should go hand in hand with your plan. Protecting your savings means a few different things:

    First, don’t take more risk than you’re comfortable taking. Unless you’re burying coffee cans filled with cash in your backyard, every retirement savings plan includes some measure of risk. Fully understand the risk in your investment program or keep asking your financial advisor more questions until you understand and are comfortable with your investment plan. A properly allocated and diversified savings plan helps guard against any major economic swings.

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    Ensure you don’t get wiped out by insuring your plan. Life insurance and long term care protection should be part of every healthy retirement plan. Owning adequate life insurance can prevent financial ruin and emotional distress for your Family during the savings years — just watch a few of the short videos at non-profit LifeHappens.org to see what I mean. U.S. Department of Health and Human Services statistics show that 70% of people turning Age 65 will need some type of Long Term Care services. Lifetime income annuities may also be a nice compliment to your retirement plan as you get closer to retirement age. These annuity programs can guarantee an income for life but still enjoy a potential market rate of return. It’s important to note the earlier you secure these important retirement protections, the cheaper they will be.

    Saving enough for retirement may seem like trapping a unicorn or finally spotting that pot of gold at the end of the rainbow. In other words, it may seem like a fantasy. While your individual retirement goals are different from your neighbors’, follow these four simple concepts diligently and you will absolutely retire with confidence. Saving enough for retirement is simple. Not easy. Simple.

    “The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term, is the indispensable prerequisite for success.” Brian Tracy, Leading Speaker, Author and Entrepreneur

    Featured photo credit: betacam via freeimages.com

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    Last Updated on January 5, 2022

    33 Painless Ways to Save Money Now

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    33 Painless Ways to Save Money Now

    In a difficult economy, most of us are looking for ways to put more money in our pockets, but we don’t want to feel like misers. We don’t want to drastically alter our lifestyles either. We want it fast and we want it easy. Small savings can add up and big savings can feel like winning the lottery, just without all of the taxes.

    Some easy ways to save money:

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    1. Online rebate sites. Many online sites offer cash back rebates and online coupons as well. MrRebates and Ebates are two I like, but there are many others.
    2. Sign up for customer rewards. Many of your favorite stores offer customer rewards on products you already buy. Take advantage.
    3. Switch to compact fluorescent bulbs. The extra cost up front is worth the energy savings later on.
    4. Turn off power strips and electronic devices when not in use.
    5. Buy a programmable thermostat. Set it to lower the heat or raise the AC when you’re not home.
    6. Make coffee at home. Those lattes and caramel macchiatos add up to quite a bit of dough over the year.
    7. Switch banks. Shop around for better interest rates, lower fees and better customer perks. Don’t forget to look for free online banking and ease of depositing and withdrawing money.
    8. Clip coupons: Saving a couple dollars here and there can start to add up. As long as you’re going to buy the products anyway, why not save money?
    9. Pack your lunch. Bring your lunch to work with you a few days a week, rather than buy it.
    10. Eat at home. We’re busier than ever, but cooking meals at home is healthier and much cheaper than take-out or going out. Plus, with all of the freezer and pre-made options, it’s almost as fast as drive-thru.
    11. Have leftovers night. Save your leftovers from a few meals and have a “leftover dinner.” It’s a free meal!
    12. Buy store brands: Many generic or store brands are actually just as good as name brands and considerably cheaper.
    13. Ditch bottled water. Drink tap water if it’s good quality, buy a filter if it’s not. Get 
        a reusable water bottle and refill it.
      • Avoid vending machines: The items are usually over-priced.
      • Take in a matinee. Afternoon movie showings are cheaper than evening times.
      • Re-examine your cable bill. Cancel extra cable or satellite channels you don’t watch. Watch the “on demand” movie purchases too.
      • Use online bill pay. Most banks offer free online bill paying. Save on stamps and checks, and avoid late fees by automating bill payment.
      • Buy frequently used items in bulk. You get a lower per item price and eliminate extra trips to the store later on.
      • Fully utilize the library. Borrowing books is much cheaper than buying them, but in addition to books, most local libraries now lend movies and games.
      • Cancel magazine/newspaper subscriptions: Re-evaluate your subscriptions. Cancel those you don’t read and consider reading some of the other publications online.
      • Get rid of your land-line. Do you really need a land-line anymore if everyone in the family has a cell phone? Alternatively, look into using VOIP or getting a cheaper plan.
      • Better fuel efficiency. Check the air pressure in your tires, keep up with proper auto maintenance, and slow down. Driving even 5MPH slower will result in better fuel mileage.
      • Increase your deductibles. Increasing the insurance deductibles on your homeowners and auto insurance policies lowers premiums significantly. Just make sure you choose a deductible that you can afford should an emergency happen.
      • Choose lunch over dinner. If you do want to dine out occasionally, go at lunchtime rather than dinnertime. Lunch prices are usually cheaper.
      • Buy used:  Whether it’s something small like a vintage dress or a video game or something big like a car or furniture, consider buying it used. You can often get “nearly new” for a fraction of the cost.
      • Stick to the list. Make a list before you go shopping and don’t buy anything that’s not on the list unless it’s a once in a lifetime, killer deal.
      • Tame the impulse. Use a self-enforced waiting period whenever you’re tempted to make an unplanned purchase. Wait for a week and see if you still want the item.
      • Don’t be afraid to ask. Ask to have fees waived, ask for a discount, ask for a lower interest rate on your credit card.
      • Repair rather than replace. You can find directions on how to fix almost anything on the internet. Do your homework, and then bring out your inner handyman.
      • Trade with your neighbors. Borrow tools or equipment that you use infrequently and swap things like babysitting with your neighbors.
      • Swap online. Use sites like PaperBack Swap to trade books, music, and movies with others online. Also, look for local community sites like Freecycle where people give away items they no longer need.
      • Cut back on the meat. Try eating a one or two meatless meals every week or cut back on the meat portions. Meat is usually the most expensive part of the meal.
      • Comparison shop: Get in the habit of checking prices before you buy. See if you can get a better price at another store or look online.

      Remember that saving money is not about being cheap or stingy; it’s about putting money into your bank account rather than giving it to someone else. There are many ways to save money, some you’ve never thought of, and some that won’t appeal or apply to you. Just pick a few of the ideas that sound doable and watch the savings add up. Save big, save small, but save wherever you can.

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      Featured photo credit: Damir Spanic via unsplash.com

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