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Are You Doing These 5 Simple Things to Save For Retirement?

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While practically everyone knows that they need to save for retirement, actually reaching the goal of having enough money to last your through your golden years can be difficult to achieve.  Each generation faces a unique set of challenges and advantages when it comes to saving for this important life event, but there is some advice from Credit Logon that can apply to just about anyone.

Start small and your savings will grow

If you’re a Millennial, then you have the advantage of a long retirement window.  Over the next several decades, compounding interest will make it possible to see even the small amounts of money that you can put aside now quadruple by the time you’re ready to retire.  While older generations don’t have as much of an advantage, it is important to remember that your savings will continue to accumulate interest while you’re retired.  With careful investing, it’s possible to make a retirement nest egg that seems too small into enough money to live comfortably.

Know your financial needs

Forty percent of Americans estimate that they will need $500k to retire, while the average retirement cost is nearly $750,000.  While it is easy to assume that most people are underestimating how much they need, it’s also important to realize that many retirees are probably taking into account the possibility of downsizing a home or cutting back on their lifestyle.  Baby Boomers are certainly better able to predict how much money they will need for upcoming life events than Gen Xers or Millennials, giving them a distinct advantage here.

Despite what plenty of experts may tell you, there is no “right” amount of money that everyone needs to retire.  How much you need to save will depend on a range of factors including the way you invest, where you live, your lifestyle, and the age at which you retire. When these factors are combined with factors you can’t control, such as your health and inflation,  it isn’t  surprising that CNBC reports that 81 percent of Americans don’t know how much they need to retire.

Enroll in Employer-Based Plans

One of the easiest and most effective ways for anyone to save for retirement is to take advantage of their company-sponsored retirement plan. These plans offer distinct tax advantages and make saving for retirement relatively simple.  Unfortunately, it’s all too common for Millennials to not see the advantages to saving in one of these plans early on.

Look for help

Nearly 72% of Millennials admit they do not know as much as they should about retirement savings.  While fewer members of older generations will say that they don’t know enough about investing, there’s still a big gap between what the average person should know and how much they really know.  Unfortunately,  only 36% of Millennials actually get help from a professional financial advisor.  No matter what your age is, don’t be afraid to ask a professional to review your financial plan.

Plan, prioritize, and protect

No matter how old you are, having a retirement plan is crucial to reach your savings goals.  Developing that plan, though, can be a real challenge.  While older generations may have a clearer picture of what they want their retirement to look like, there is a shorter window to meet their goals.  Younger generations have plenty of time to save, but must contend with an unknown future.

Fortunately, a skilled financial advisor has experience in dealing with all of these situations.  Whether you just need someone to review the plan you already have, or if you need help getting started, look to a professional for guidance.

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5 Common Financial Mistakes in Retirement

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5 Common Financial Mistakes in Retirement

In your twenties or thirties, purchasing your first home is the most daunting financial decision you’ll probably make. But as you progress toward retirement, a much bigger decision looms large: how to fund your lifestyle when you’re no longer working. The stress of living without employment income, the pressure to live up to your own retirement expectations, and the uncertainty of the whole undertaking conspire to trigger unwise decisions even in otherwise financially savvy people. Here are the five biggest retirement mistakes.

 

Delaying Insurance Purchases

Insurance such as life insurance and long-term care insurance can feel like money down the drain when you’re living on a fixed income, particularly if you don’t know whether you’ll ever actually use long-term care insurance. These policies increase in price as your age goes up, so the time to purchase is always now. By making the decision now, you may lock in a lower rate, not to mention protect yourself against financial disaster.

 

Moving Without Careful Thought

Sick of the cold and want to join other retirees in Florida? Ready to downsize to a smaller, safer home? Hoping to save money by renting a small townhouse? Think carefully before you take the plunge. You need to have a clear understanding of what your new living situation will be like. Don’t rely on fantasy.

 

Remember also that your home is probably your biggest investment. It can be a source of cash in times of need, and if it’s paid off, provides significant financial stability. If you’re over 62, you can even access your home’s equity in the form of a reverse mortgage. This loan doesn’t have to be repaid as long as you remain in your home and follow the loan’s terms. So think carefully before bowing out of the home that gives you this flexibility.

 

Expecting a Lifestyle You Can’t Afford

Your fifties were likely the time that you earned more than ever before. When you’re earning big, it’s easy to become accustomed to lots of vacations, lots of eating out, and a lavish lifestyle. Retirement may require you to scale back. Even if it doesn’t, you’ll have more time to fill than before. Don’t fill it all with expensive meals and expensive entertainment, or you’ll soon find yourself looking for another job.

 

Not Being Realistic

We all have our biases. Some of us are blindly optimistic, while others can’t shake negative thoughts. An unrealistic bias in either direction can undermine your retirement. Pessimists may underestimate the strength of their savings, living a more frugal and stressed-out life than is really necessary. Optimism can convince you that the economy is stronger and your savings more abundant than is really the case, spurring you to overspend. Get a reality check with a financial planner, and stick to a spending plan based on ongoing assessments.

 

Relying on Hobby or Consulting Income

Selling vintage goods, consulting, an Etsy store, or an Ebay empire are all excellent strategies for bringing in extra income. If you have to rely on them to survive in retirement, though, you’re already in trouble. These streams of income are inherently unreliable. If you need a second income and know you have to earn a specific amount each month, consider a part-time job instead. Consulting and hobby income can offer a little spending money, but these strategies offer little assurance of reliable income.

Frugal Articles of the Week

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Reading Nook Photo

Last week I took a little break from the frugal round-up. Sorry Frugaling fans, but I’m back and have a terrific list of favorite reads over the last couple weeks. Hope you enjoy and share widely!

The Millionaire Pitcher that Lives in a Van [Video] by VICE
Daniel Norris isn’t like most star athletes. Heck, Daniel Norris isn’t like most people. With around $2 million in the bank from a baseball contract, he could be living well; at least, fancier than he does today. In the off-season, Norris takes to his VW camper van and lives, cooks, reads, and travels in the tiny enclosure. I love this guy’s story, and it’s neat to get a little tour of the camper.

What Would Happen If We ALL Stopped Paying Our Student Loans, Together? by Jennifer Schaffer
Growing numbers of graduates and students are doing something rash and potentially harmful to their credit score: they’re purposefully defaulting on student loans and refusing to pay them back. Regardless of your feelings about defaulting on loans — whether right or wrong — the rise in this behavior speaks to the broader context and problem. Student loans are over $1 trillion! A TRILLION! This is unsustainable and harmful to the greater growth prospects in America.

Pope Francis, in Sweeping Encyclical, Calls for Swift Action on Climate Change by Jim Yardley & Laurie Goodstein
Thursday, the Pope and Vatican released a 184-page document cataloguing the reasons why climate change is of utmost importance and what we need to do about it. The Pope talked about consumerism, throwaway culture, and how the victims tend to be those in the Southern hemisphere.

The Health Benefits Of Early Retirement Are Priceless by Financial Samurai
Consider this, working life takes a toll on people. Many are overworked and underpaid, and the stress of being in difficult jobs adds a terrible weight. The Financial Samurai points out the many rewards of early retirement (if it’s possible).

Frugal Articles of the Week

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Reading Nook Photo

Every week I like to feature a few frugal articles that caught my eyes. Curl up in your favorite reading nook and enjoy. Hopefully these encourage you to live frugal lives!

Families Ditch Cars for Cargo Bikes by Laura Moser
The Hoverman family lives in a ritzy neighborhood with a luxury, Audi SUV. They have it all, seemingly. But one thing that sets them apart is that they avoid driving on the weekends. Instead, they opt for “cargo bikes,” which allow for the whole family to ride in comfort and still be eco-friendly. What a great idea!

Nearly a third of savers have less than $1,000 for retirement by Vaishali Gauba
The statistic might shock you: a significant minority has little to speak of for retirement. Of the total sample population for the survey, 57 percent had less than $25,000 saved. This absence of wealth could be exceptionally difficult for future comfort, livelihood. But beyond the basic stats, I must caution readers that the solution isn’t as simple as saving more. The problem is that people are not paid enough to save enough. Then, and only then, people can be better directed to plan for retirement. Their immediate needs must be met first.

The Three Rules of Self-Sufficiency and Preparedness by The Frugal Farmer
Laurie’s a prepper. She has been storing food and goods for whatever financial straits she might find. In this enlightened article, she addresses three types of self-sufficiency: physical, financial, and spiritual.

Google launches its own mobile network by Chris Welch
This is tremendous news for all cell phone subscribers. Google has entered the cell phone network market. Now, they’re doing more than just building the operating systems and contributing to hardware development. With Google’s Project Fi, users can switch seamlessly between providers (Sprint and T-Mobile) across the world. Wherever there’s wi-fi, the phone defaults there, and then pops up to cell towers when you leave that area. Plus, the phone will work internationally, too. The best part — the frugal part — is that the monthly fee is $20 plus $10 per GB of data. If you don’t use your entire allotment, you actually get paid back as credit!

To fight income inequality, tell your friends how much you make by Meredith Bennett-Smith
It might sound counterintuitive, but income inequality calls for drastic measures! Despite this being the 21st century, there’s great income inequality between races, genders, and social classes. One author is advocating that people of all stratums rise up and say how much they earn. The hope is that people will be able to get an accurate and fair assessment of what they should be paid.

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