- Personal Finance
Make Saving for Retirement Easy
Retirement Planning Tools: Great Retirement Planning Techniques
Retirement Planning can be imtimidating for many people. Most of us realize that having a retirement savings plan is critical, but many of us aren't financial experts and getting by from week to week is hard enough without putting aside a large chunk of every week's paycheck towards retirement. The age of 65 can seem so far away for young or even middle aged workers, but the last thing you want is to hit your mid-fifties and realize you have the average savings for retirement, which is a mere $50,000. Nowhere remotely close to being enough retirement savings for you to live comfortably in retirement, or to even retire. Saving for retirement is difficult, and with hundreds of retirement plans out there, many of which seem too stressful on everyday finances to be reasonable, saving up a large enough nest egg for the Golden Years can be difficult, but it is necessary. Hopefully this hub will give you the information and retirement planning tools you need to start putting away a nest egg to make those retirement years a reality instead of an ever vanishing dream.
Retirement Planning Tools & Resources
Tips to Increase Retirement Savings
The question is a good one: how can I painlessly (or less painfully) increase my retirement savings? From retirement calculators to specialized retirement savings plans, there are many ways to go about increasing that nest egg so you don't find yourself painfully short when that time comes. The following are several bits of advice to help start saving for retirement and to make the transition less painful:
First of all: Diversify! Not all your money has to, nor should it, come from one place. You should have your money spread out between stocks, bonds, a savings account, checking account with interest, 401-k, IRA, and CDs. This allows security for your retirement portfolio, and also offers several places where you can invest your income.
If you feel overwhelmed remember the following:
Retirement Education & Investment Education:
Jim Kramer, "Mad Money" CNBC
Suzie Orman, "The Suzie Orman Show" CNBC
All four of these are great sources for learning about saving, investing, and smart spending. There are a wide array of financial books out there and a good subscription to a finanace magazine is cheaper than ever. You don't need to be an expert, but you want to be at least basically knowledgable.
Little Things Make a Big Difference in Retirement:
Checking Accounts with interest - instead of just having a normal checking account, see if your bank offers one with interest, and donate the monthly interest into an actual savings account, IRA, or CD every month to make sure it doesn't get lost with "spending money," the way that loose change tends to.
Savings Account - Make it "untouchable" so you get into the habit of not raiding your retirement savings and get used to budgeting. Build up to short term CDs that often pay better, and keep re-investing or holding the new returns in savings. A little bit at a time is better than nothing.
Then there's always the obvious: learn how to make cash online to increase your overall income.
Retirement Savings Strategies Pay Off
Suzie Orman on Taxes
Video on Retirement Planning
More Retirement Planning Tips
Take $10-20 out of every paycheck first thing and put it into some type of account, even if it's only an interest bearing savings account. This should be in addition to any 401-k donations, which should be second nature in your retirement savings at this point.
If you tend to have two sodas a day, or two hotdogs, or two coffees, go ahead and have two every other day, and just one every other day. On those days take the difference from the one soda or coffee saved and immediately go to save that. This doesn't require you to give up the little things completely (for most of us that's completely unreasonable), but still gets you some savings.
Keep a change jar. Change gets spent often just to get rid of it. Have a change jar and cash in when it's full and if you're not going to put the full amount in a retirement account, then at least donate 1/2 of it to a retirement savings account.
Never carry credit card debt. This is one of the most critical factors to solid retirement plans. If you are, pay off that debt before savings. Even a healthy 10% per year return on your retirement money doesn't come close to matching the 12-33% most credit cards charge. Pay off that debt first before putting a lot of money into savings, and don't use those credit cards again!
Don't raid the retirement accounts with self "IOUs." These never get paid back, and they rob you of the compounding interest your retirement savings need to grow into a comfortable nest egg.
Unexpected money is NEVER spending money. Always apply at least 1/2 of unexpected payments, bonuses, freelance work, or side work into one of your retirement accounts. If you weren't expecting that $50 anyway, then it should be painless to put $25 into a savings bond, CD, or IRA.
Take advantage of work 401-ks. Most companies will match a certain percentage (usually 5-10%) of what you put in. Make sure to take advantage by getting the maximum matching funds from your company. That's free money, and you won't notice the drop in pay as much because that 401-k income is non taxable. Since you usually pay 25-30% taxes on every dollar, anyway, the drop in income isn't as extreme as most think.
The other is to remember the small things. There are many ways to make money online, and learning how to make more money through online income makes it a lot easier to save up for retirement.
Retirement Savings Statistics:
Average Savings for Retirement...
Avg. Retirement Savings 25 - 34: 70% saved less than $25k, 12% were between $25k-$50k, 9% were between $50k-$100k, 5% were between $100k-$250k, and 4% were above $250k.
Avg. Retirement Savings 35 - 44: 50% saved less than $25k, 15% were between $25k-$50k, 14% were between $50k-$100k, 10% were between $100k-$250k, and 10% were above $250k.
Avg. Retirement Savings 45 - 54: 41% saved less than $25k, 14% were between $25k-$50k, 13% were between $50k-$100k, 17% were between $100k-$250k, and 16% were above $250k.
Avg. Retirement Savings 55+: 39% saved less than $25k, 12% were between $25k-$50k, 7% were between $50k-$100k, 23% were between $100k-$250k, and 19% were above $250k.
Avg. Retirement Savings for All: 52% saved less than $25k, 13% were between $25k-$50k, 11% were between $50k-$100k, 12% were between $100k-$250k, and 11% were above $250k.
It's been reported that many workers in their early to mid fifties only have an average savings for retirement of $50,000. That is way too little way too late. While every little bit helps for every single year saved, the earlier the better and the more the better.
Make Retirement Savings Last
Saving for Retirement
Common Obstacles to Saving for Retirement:
Starting to save too late (35%)
The cost of health care or insurance (32%)
Low-paying work (29%)
Credit card debt (28%)
The cost of housing (27%)
These are the main obstacles that prevent people from saving money for retirement. You have to find a way to save for retirement, and this is true whether you're 55 and realizing you're now in trouble, or 21 and young with plenty of time. There's no excuse to not start saving for retirement, and this is a must. You don't want to be in desperate poverty in old age, at a time where you should be able to enjoy life after a long life time of working. There are many ways to even make a few extra hundred a month, like writing for HubPages, or collecting old books and selling them for a profit. All these small things can be done to build up a solid nest egg over time.
Retirement Hopes and Dreams
Compare Retirement Savings Plans
So how do you feel about your retirement savings?
Financial and Retirement Resources
- Retirement Savings Made Easy According to Kiplinger
Great online article from one of the nation's leading finance magazines.
- How to Retire a Millionaire
A great article showing by age group what individuals have to save to retire at age 65 as millionaires.
- AARP Article on Retirement Savings Worries
A good solid AARP magazine article on the common worries and concerns of many nearing retirement.
- Ben Stein on Retirement
Ben Stein's advice on retirement and retirement savings.
- Getting a Late Start on Retirement Savings
Good article on tips to get saving when you're starting late in life.