7 Practical Tips to Build for Your Future
By: Source: AARP Bulletin Today Date Posted: 2004-03-30 11:29:00-05:00
Frustrated by your inability to save? Don't know how to begin? Worried that, at your age, it won't do much good? If so, take heart. Experts say it's never too late to start saving, and they have plenty of practical tips to send you on your way and keep you on track. Here are some of them:
- Calculate what you're going to need. How are you going to reach your goal if you don't know what it is? To help you estimate what you'll need to retire comfortably, use the AARP Bulletin Online's retirement calculator or one of the calculators cited in our list of Resources for Your Retirement Planning.
- Pay yourself first. Make sure that with every paycheck you're putting money aside for yourself. After all, who deserves it more?
- Prepare for emergencies. Nothing can wreck your savings plan faster than being hit with an unexpected expense—say, a $1,000 car repair bill. So expect the unexpected, and put money aside for it.
- Automate your savings—by having some of your money go directly into savings. "What this does," says Barbara O'Neill, in her Guidebook to Help Late Savers Prepare for Retirement, "is keep the money out of your hot little hands."
Don't have a retirement plan to contribute to where you work? No problem, says O'Neill, a Rutgers University professor. You can take advantage of IRAs, mutual fund automatic deposits and saving bonds purchase plans. - Grab all the free money you can get. What "free money"? The matching funds—typically 3 percent of salary—that many companies offer to their 401(k) participants. You wouldn't pass up a pay raise, so why turn your back on this gift?
- Kick it up a notch. If you're contributing 2 percent of your salary to your 401(k), kick it up to 3 or 4 percent. And the two best times to do this, O'Neill says, are when you get a pay raise or when your expenses go down, such as when you complete payments on a car.
- Ferret out "new money," and save it. This means looking really hard at your expenses, cutting wherever you can and diverting the money into savings. Don Blandin of the American Savings Education Council says, for example, that many people can cut the cost of home and car insurance by hundreds of dollars a year—and put this money in savings—by increasing the size of their deductibles.
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