Retirement Preparation: Ways to Save More Now to Live Comfortably Later

Transcription

1 Retirement Preparatin: Ways t Save Mre Nw t Live Cmfrtably Later Retirement may seem a lng way ff fr peple in their 20s, 30s and 40s. Why fret abut smething that s decades away? Ben Franklin nce said that we must Lk befre, r yu'll find yurself behind. Financial advisers estimate that families in Generatin X (peple brn between 1965 and 1976) and Generatin Y (peple brn between 1977 and 1994) will need t save between $2 millin and $3 millin t live cmfrtably during retirement. Mrever, an estimated 80% f American wrkers are expected t fall shrt f meeting all their financial needs in retirement unless they take immediate actin t save mre. But take heart: It s nt t late t start saving fr retirement. Here, retirement planning specialists ffer their friendly suggestins fr hw t maximize retirement savings nw s yu wrry less later: ASSESS yur cash-flw by creating a budget. Exactly hw much can yu affrd t set aside each mnth fr retirement? T find ut, lk at hw much mney yu take hme in a mnth, and hw much yu spend. Hw much f yur spending cvers basic living expenses (mrtgage r rent, fd, utilities, etc.) and hw much is discretinary (eating ut, vacatins, etc.)? Then decide hw much f yur discretinary spending yu can affrd t put away fr later. ENVISION, the future. What gals and milestnes d yu want t achieve n the rad t, and during, retirement: funding a child s r grandchild s educatin; buying a vacatin hme; traveling? What cntingencies d yu need t accunt fr, such as health, disability and nursing care, as yu get lder? PLAN fr the future. Once yu get a visin f yur future, it s time t build a frmal plan designed t get yu t, and thrugh, retirement n yur terms. It s wrth asking a retirement planning expert fr help drafting that plan, including such vital ingredients as an investment plicy statement and an asset allcatin mdel. These are things that help yu stay n a path, where yu re assets are grwing steadily ver time, explains Irwin Grss, a wealth cach at Family Wealth Partners in Westn, Fla. Seize pprtunities nw. The fllwing steps (taken with the help f a retirement planning specialist as needed) can make a huge difference dwn the rad: Participate in yur emplyer's retirement plan, at least t where yur emplyer matches cntributins. This is a 100% return n any dllar they match, explains financial planner Andrew Smith f Crnerstne Financial Partners in Crnelius, N.C. Cnsider investing in a Rth accunt, either inside r utside a emplyer s retirement plan. Funds in Rth accunts cme ut tax-free. Lk at ther retirement savings vehicles, such as traditinal IRAs. Maximize retirement plan cntributins if pssible. Autmate retirement cntributins s saving is a n-brainer.

2 T find a financial planner in yur area, access the Financial Planning Assciatin s natinal netwrk at April 2011 This clumn is prduced by the Financial Planning Assciatin (FPA ), the leadership and advcacy rganizatin cnnecting thse wh prvide, supprt and benefit frm prfessinal financial planning. Please credit FPA if yu use all r part f this clumn. T cnnect with a member f FPA fr yur stry, call FPA s Public Relatins fsters the value f financial planning and advances the financial planning prfessin. Fr mre infrmatin abut FPA, visit r call

3 Weddings n a Budget: A Plan t Pay fr the Big Day Nw that the big questin has been ppped and the ring s n her finger, it s time t put the wedding planning machine in mtin. Then the questin becmes, Hw are we ging t pay fr this? Frm the venue t the videgrapher, the bride s gwn t the grm s tux, wedding expenses can munt quickly. Which is why, accrding t financial planners, it s wise fr cuples t have a plan t pay fr their Big Day. Here are sme imprtant planning steps t make it a wrry-free walk dwn the aisle: Build a budget. Discuss the gals yu have fr yur wedding type f venue, number f guests, receptin fd and entertainment, etc. then build an itemized list f all ptential wedding-related expenses (with feedback frm a wedding planner, r smene wh s been thrugh the prcess recently s yu dn t frget anything). Next figure ut hw much mney yu ll have t cver thse expenses, including yur wn funds plus cntributins frm family. T what extent will parents r ther family members cntribute t the cause? Answer that questin early in the planning prcess, suggests Matt Shwley, a Certified Financial Planner in San Dieg, Calif. Knwing wh s paying fr what, setting thse expectatins early, makes the prcess much smther. Start stashing cash. Establish a dedicated, jint savings accunt preferably ne that prvides interest alng with unfettered access t funds t depsit and withdraw funds earmarked fr the Big Day. Later, Shwley ntes, the cuple can use that accunt fr ther purpses, such as saving fr a hme. Priritize. There may nt be enugh mney in the budget t pay fr everything n yur wedding wish list. That means determining which items n the list are mst imprtant and which might be expendable. Seek ways t save. Frm taking a tier ff the wedding cake t mving the wedding day frm Saturday t Friday t save mney n the receptin venue, there are many ways t trim csts withut cmprmising the wedding wish list. Here s where it can really help t leverage family cntacts and yur circle f friends t find peple in the service industry wh can help save yu mney, ntes Shwley. Be budget-cnscius but flexible. If yu stretch the budget in ne area, says Shwley, lk t cut back in anther. Because nce yu have a budget in place, it s imprtant t stick t it. Dn t dance with debt. Entering a marriage burdened with a muntain f wedding debt is a recipe fr strife. Resist the temptatin t spend abve yur means, Shwley suggests, and avid relying heavily n credit cards t cver wedding expenses. Instead, cnsider brrwing mney frm family r asking fr a cash wedding gift early t help cver expenses.

4 April 2011 This clumn is prduced by the Financial Planning Assciatin (FPA ), the leadership and advcacy rganizatin cnnecting thse wh prvide, supprt and benefit frm prfessinal financial planning. Please credit FPA if yu use all r part f this clumn. T cnnect with a member f FPA fr yur stry, call FPA s Public Relatins fsters the value f financial planning and advances the financial planning prfessin. Fr mre infrmatin abut FPA, visit r call

5 Wise Ways t Use Yur Tax Refund Visins f excess dance in yur head as yu await the arrival f a tax refund check frm the IRS. This is fund mney, s yu might as well spend it n smething frivlus, right? Nt s fast! Tempting as it may be t use a tax refund fr a shpping spree r an expensive night n the twn, the smart mve, say financial planning prfessinals, is t d smething practical with at least part f it, while reserving the rest t spend n smething fun. Here are sme f the best ptins fr putting a tax refund t cnstructive use: Put it tward retirement. Instead f instant gratificatin, think lng-term by putting the mney in a retirement Put the mney in a Rth IRA r a traditinal IRA, where it has an pprtunity t grw ver time tax-deferred r (with a Rth) tax-free, subject t IRA rules. Ask a financial planning prfessinal if yu need help evaluating, chsing and establishing a retirement accunt t huse the mney. Use it t pay dwn a high-interest debt. Debt can munt quickly, especially n a high-interest credit card. Using a tax refund nw t help get ut frm under a burdensme, fast-grwing credit card balance will translate int greater financial freedm later. Make a vacatin allcatin. Yu knw what they say abut, All wrk and n play Depsit yur tax refund int a CD r sme ther type f lw-risk savings vehicle and earmark that mney specifically t fund a fun vacatin. If yu put it in a CD, be sure it has a shrt enugh term that yu can take that mney ut penalty-free in time t use it fr yur vacatin. Strive fr refund reductin. While it s gratifying having the IRS send yu mney instead f vice-versa, the fact that yu re receiving a refund in the first place means yu had t much tax withheld - which amunts t an interest-free lan t the U.S. gvernment. Explains Jn L. Ten Haagen, a financial planner in Huntingtn, N.Y, The bttm line is that yu dn t want a big refund. Try t keep it under $500. T get belw that threshld, talk t a financial planning prfessinal and yur emplyer, abut ways t adjust yur tax deductins, s yu retain cntrl f yur mney instead f Uncle Sam. T find a financial planner in yur area, check ut the FPA s natinal database at April 2011 This clumn is prduced by the Financial Planning Assciatin (FPA ), the leadership and advcacy rganizatin cnnecting thse wh prvide, supprt and benefit frm prfessinal financial planning. Please credit FPA if yu use all r part f this clumn. T cnnect with a member f FPA fr yur stry, call FPA s Public Relatins fsters the value f financial planning and advances the financial planning prfessin. Fr mre infrmatin abut FPA, visit r call