Plan for a sucessful retirement

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  • | 9:32 a.m. May 2, 2012
  • Winter Park - Maitland Observer
  • Opinion
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Economic doom and gloom continue to dominate headlines, and there is no denying the markets have been very volatile in recent years. These factors can be discouraging for people approaching retirement. People, especially baby boomers who are looking to retire in the next five years, are searching for credible advice on what they should do.

A recent survey by the Employee Benefit Research Institute revealed that only 14 percent are “very confident” that they will have enough money to live comfortably in retirement. Sixty percent of workers report they have household savings and investments of less than $25,000.

Don’t let yourself become discouraged by market volatility or other factors outside of your control. It is still possible to plan for a successful retirement by following three important strategies:

• Work longer

• Increase your savings

• Live more efficiently

Retirement experts consider these three strategies as important steps in building the retirement assets that most people will need. Let’s take a closer look at all three.

Work longer

Most people look forward to retiring as soon as possible, and the strategy of working longer probably doesn’t sound appealing for many.

You’ve probably heard the saying “If you love what you do, you’ll never work a day in your life.” If you are lucky enough to get paid for doing what you love, that’s the best of all worlds. But we’re not talking about working forever; even one or two more years of work can make a significant impact on building your retirement assets.

And you don’t have to stay in the same job or even work full time. Even part-time or seasonal work can reduce your need to deplete retirement assets. Consider learning a new skill to help you stay in the work force while keeping work interesting.

Increase your savings

For 2012, retirement plan participants may contribute up to $17,000 to an employer-sponsored retirement plan. Those ages 50 and older can make an additional $5,500 catch-up contribution.

When evaluating how much you can afford to contribute, remember the tax benefits. With traditional 401(k)s, for instance, contributions come out before taxes are assessed.

If you are in the 25 percent tax bracket, you can increase your monthly 401(k) contribution by $100, and it will only reduce your take home pay by $75. That tax benefit is an incentive to save more.

Live more efficiently

As we age, we think of becoming more comfortable, not tightening our belts.

But consider whether you can trim expenses while still enjoying life. Here are some suggestions:

• Downsize to one car from two.

• Limit eating out at restaurants.

• Cut memberships you don’t use regularly.

• Do household chores that you pay someone else to do.

There are other pitfalls that those approaching retirement should be careful to avoid.

Many feel a sudden increase in disposable income, perhaps because the empty nest has eliminated the expenses of raising and educating children.

Be cognizant of the temptation to splurge on an expensive purchase, like an addition to your home or a large RV. These often end up being more costly than originally anticipated.

It is OK to splurge on yourself, but do it as part of your budget and have the money saved before you spend it. Budgeting before you splurge gives you the comfort of having control over your finances, instead of worrying where the money will come from.

Taken together, these steps can add to your confidence level that you will retire with more money in the bank and enjoy the golden years of your life.

Ray White Jr. is a senior vice president of PNC Wealth Management and leads those efforts for Central Florida. He can be reached at [email protected]


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