In these tough economic times, thinking about retirement and planning for it can be a daunting task. There used to be two big pay raises that would kick start a retirement fund; your kids graduating from college, and paying off your mortgage. However, times have changed and a new way of thinking has emerged. With unemployment being a huge problem for young adults starting their careers, Mom and Dad step into help leaving them less money to put toward their retirement. ?According to a study by Pew Research ?13% of parents with grown children say one of their adult sons or daughters has moved back home in the past year. This recession has produced a bumper crop. Census Bureau data confirm that proportionately fewer young adults are living solo now than before the recession.? Problem number two is the housing market is so low and people are having a hard time selling their home, in order to get out from beneath their mortgage. Another factor contributing to this is, the years spent borrowing home-equity has left some retirement-aged folks saddled with debt. According to the Wall Street Journal ?All kinds of debt held by this age group has risen, but the big problem is mortgages. Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20% had secondary mortgages, including home-equity lines, according to research group Strategic Business Insights? Macro Monitor. That was up from just 22% and 12%, respectively, in 1994. In a few rare cases having a mortgage in your retirement years makes sense. It may be smarter to keep your cash liquid than raid saving to payoff housing debt, especially if you itemize on your tax return and can deduct the mortgage interest. ?Unfortunately the economic state doesn?t seem to be fixing itself, so while we are waiting for it to bounce back there are still ways for people to successfully plan for retirement. Here are a few things to start thinking about:
?
- Start saving, keep saving, and stick to your goals: If you have started saving and have a plan in place, stick with it. If you have yet to start every little bit will help. Put together a plan for you and your family and stick with it.
- Know your retirement needs: Living is expensive and retirement is just as. Experts estimate that you will need about 70 percent of your preretirement income?lower earners, 90 percent more? to maintain your standard of living when you stop working. The key to secure a retirement is to plan ahead.
- Contribute to your employer?s retirement savings plan: If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute all you can. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time you will
accumulate a lot with the compound interest and tax deferrals that will make a big difference. - Consider basic investment principles: How you save may be more important than how much you save. Inflation and the type of investments you make play important roles in how much you?ll have saved at retirement. Try putting your savings in different types of investments, but always remember to ask questions and stay informed. This includes Individual Retirement Accounts or an (IRA), you can put $5,000 a year into them and you can start contributing more once you turn 50.
- Find out about your Social Security benefits: Social Security pays benefits that are on average equal to about 40 percent of what you earned before retirement. Try and get a Social Security Statement each year that gives you an estimate of how much your benefit will be and when you can receive it.
- Most importantly, DON?T touch your retirement savings: If you withdraw from your retirement savings before your ready, you will lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties.
?
It is important to start thinking about your future before it gets too late. Following these easy tips can help secure you and your family?s future. For more money saving tips visit us at Connect Your Home or call (888)566-3979. Do you have any other tips for planning for retirement? Let us know!
No comments:
Post a Comment