And just as a workout regimen doesn't produce results overnight, systematically building up your emergency and retirement funds will take time. For example, let's say you're earning a $60,000 salary, and want to save up an emergency fund of $15,000 to $20,000 (six months of living expenses.) You'd probably have about $700 to work with each month.
You'd divvy that amount up (say, $400 for retirement and $300 for savings each month), says Ellen Derrick, a certified financial planner™ with LearnVest Planning Services. "It all depends on what you'd already saved in each area," she explains, "but this might take you a little more than five years."
Rest assured, like with most money goals, if you just get started, your numbers will grow.
No. 3: Start today
More than half of U.S. households are at risk of not having enough savings to count on in retirement, and the longer you wait, the harder it gets to grow your nest egg.
For example, at age 25, earning $35,000 a year, assuming the market returns 7 percent annually, you'll need to save about $400 a month to reach a million dollars by the time you retire at 65. But wait until you're 45, and to get that same million, you'll need to increase your monthly savings to more than $2,000 -- five times the amount you would have needed to save in your twenties (ouch!).
The ideal, of course, is to avoid the need to restart by never stopping in the first place. "You don't want to get on a yo-yo of starting and stopping saving for retirement every time you need to get your car serviced," says McNary. The people who save the most for retirement find a set amount to sock away every month, then increase the percentage they save over time.
If you have trouble putting the money away on your own, find an "accountability partner," says Bengds, a family member, friend, or financial adviser who can help you stick to your plan.
Remember, no matter how many times you get off course, every day is a new opportunity to reboot.
More from LearnVest:
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So if you blame Obama, or tell yourself the gub'mint or some phantom banker will get it all, and don't save anything, who should really get the blame when you get old and have to depend on SS and food stamps? And who should I be mad at for forcing me support you with my tax dollars?
In 2010 my spouse and I cashed in our retirment so we would not lose what we worked so hard for. He was unemployed and I was struggling to pay all the bills. I had my taxes and penalties taken out, Geeze, the amout they take! but my he took all his. So, I am stillllll paying the government. I am now trying to rebuild but it is nearly impossible. It angers me to see young people in line at the grocery stores with baskets FULL and then whip out the stamps. And then elderly with their few items they can barely afford knowing they live on a small budget. I do not want to be in this situation, so I have begun to rebuild again.
I now understand the little quip.... THEIRS, stands for THE..IRS. What you make is ALL Theirs. .
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