How to Save for Retirement in Your Thirties  

January 20th, 2012 Posted in Money, Personal Finance
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How to Save for Retirement in Your Thirties
By Nicole Schmoll
How to Save for Retirement in Your Thirtiesthumbnail How to Save for Retirement in Your Thirties

Retirement seems far off for people in their 30s; it’s easy for individuals in this age group to think that they don’t need to start saving. The daily pressure of providing for a growing family can also place the financial focus on the here and now. However, money will multiply, if invested wisely over a long period of time. By setting aside a small amount of money in your 30s, you can build a suitable retirement savings by the time you reach your 60s.
Topic To Save for Retirement in Your Thirties:

  • Retirement Fund
  • Early Retirement

To Save for Retirement in Your Thirties Difficulty:

  • Moderately Challenging

To Save for Retirement in Your Thirties You’ll Need:

  • Budget
  • Money to invest
  • Retirement plan

To Save for Retirement in Your Thirties Instructions:

  • Create a budget and control your spending. Use a spreadsheet to list your expenses and bills. Things such as your mortgage payment, phone, cable, electricity, utilities, and grocery expenses go on this list. Include your debt (credit card, auto payments and student loans). Determine your net income, or how much you have left over each paycheck after taxes. Subtract your expenses from your gross income to see how much money you have left over. This is where your retirement savings will come from.
  • Determine your risk preference. Decide how comfortable you are with the higher risk associated with higher returns. Historically, the stock market, and specifically the S&P 500 Index returns about a 9 percent rate of growth over time. This growth rate is high enough to outpace inflation. Consider investing in a mix of stocks, mutual funds and bonds. Bonds are more conservative than stocks. Mutual funds are collections of stocks that help expose you to more of the stock market, which may decrease your risk of loss. If you are uncomfortable with the stock market, there are other, more conservative options available to you in annuities and money market funds. Be aware that, in general, the less risky or aggressive a product is, the less growth it offers.
  • Contribute towards your employer’s 401(k) or retirement plan. If your employer matches employee contributions, contribute the required amount to receive the maximum match. Think of this as free money and take advantage of it. Consider investing your retirement funds in a tax advantaged vehicle such as a Roth or Traditional IRA account.
  • Practice diversification and reallocation, two investment strategies that will help your retirement savings grow over time. Invest in a variety of financial products rather than just one or two stocks to reduce your risk. Every six months, review the performance of your retirement saving accounts and transfer money from over-performing funds into under-performing ones to reset your investments to their original allocation.
  • Increase your savings over time. As you pay down debt and receive income promotions or increases, allocate all extra money towards retirement savings rather than spending it on frivolous items today. This will help you maintain your current standard of living during your retirement years.
To Save for Retirement in Your Thirties Tips:
  • If you are unfamiliar with the stock market and investing, hire a financial adviser to help you make informed decisions about financial investments that fit your needs, goals and risk preferences.
To Save for Retirement in Your Thirties Warnings:
  • If you are just starting to save for retirement and you live on a budget, set up an emergency fund. In the beginning, split what you are saving for retirement with a savings account until you build up at least three months of living expenses (mortgage payments, groceries, gas, utilities).
  • Remember that no investment is guaranteed to provide growth. Consider your objectives and the risks associated with each financial product carefully before you invest.
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How to Live on 80% of Your Income  

January 20th, 2012 Posted in Money
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How to Live on 80% of Your Income
By Nola Moore
How to Live on 80% of Your Incomethumbnail It’s never too early to begin planning for retirement.

When you begin to research retirement planning, the number 80 percent pops up frequently. Nearly every website and retirement expert suggests that you need about 80 percent of your current income to maintain your standard of living in retirement. For many people, this figure is also very close to what they should be living on now to save enough for retirement. Whether you’re close to retirement or just beginning to think about what happens when you stop working, follow these simple steps to live comfortably with less.
Topic To Live on 80% of Your Income:

  • Retirement Estimate
  • Investment Planner

To Live on 80% of Your Income Difficulty:

  • Moderately Easy

To Live on 80% of Your Income You’ll Need:

  • None

To Live on 80% of Your Income Instructions:

  • Track your cash flows. You’ll have a hard time spending less if you don’t know what you’re spending in the first place. Pick a method for recording your incoming and outgoing cash and make a habit of using it. Your tracking method doesn’t have to be fancy – just make sure the method you choose is something you’ll use consistently, whether it’s pen and paper or a smartphone app.
  • Make a budget. After you’ve tracked your cash flows for a month and before you transition into retirement, decide how much money you have to spend, and how you’d like to spend it. It’s very helpful to write down your goals – traveling, a retirement home on the beach or even just a worry-free retirement – so you remember why you’re being careful with your money.
  • Don’t bring the money home. If you’re still working, arrange to have your savings automatically deducted from your paycheck and deposited into your 401(k), IRA and bank savings accounts. If you’re retired, keep most of your money in your investments and savings accounts and set up monthly automated cash transfers into your main spending account. Make it as difficult as possible to spend your savings, so you think twice before going over your budget.
  • Analyze your purchases. Make sure you understand the difference between what you need to live and what you want to have to be comfortable. You can certainly have things you want, but consider any cost to your goals and make sure you make purchases that fit into your long term plans and truly enhance your quality of life.
  • Invest your savings. Your savings should be working on your behalf, both before and after retirement, even if it’s just earning interest in a savings account. Develop an investment plan – websites like Morningstar.com, SmartMoney.com, and the Motley Fool offer good investment strategy tools for do-it-yourselfers, or you can schedule a session with a financial planner. Whatever your method, make sure you review it regularly, on at least an annual basis.
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