7 reasons you'll retire poor
See if you're making one of these seven mistakes that could have you eating ramen noodles in your golden years.
This post comes from Maryalene LaPonsie at partner site Money Talks News.
How's that retirement fund going?
If you're like nearly half of workers, you may have doubts about whether you'll have enough tucked away to avoid spending your final years living off ramen noodles.
According to the Employee Benefit Research Institute 2014 Retirement Confidence Survey, 43 percent of respondents say they are not too or not at all confident they'll have enough money for their golden years.
The reasons can vary considerably, but if you make the following seven mistakes, you're virtually guaranteed to retire poor.
1. You're too busy keeping up with the Joneses
You can't spend your whole life pretending to be rich and then think you'll retire rich too.
Living within your means isn't glamorous, but it is smart. And being smart is what will make you a wealthy retiree.
Rather than upgrading your smartphone every two years and your car every three, try being content with what you have. It doesn't matter if all your friends are remodeling their kitchens, if yours works perfectly fine, leave it be.
Having a realistic budget is the first step toward living within your means. If you don't already have one, read Stacy Johnson's advice on how to create an effortless budget you'll stick to.
2. You're not saving enough money
When you're not spending money to constantly upgrade your toys, you'll have more money to save for retirement.
With traditional pensions all but extinct, it's up to you, and you alone, to save up the cash needed to live comfortably in retirement. Don't count on Social Security either. The average monthly benefit was a paltry $1,294 in 2013.
Failure to save enough money is a sure way to retire poor. Ideally, 10 to 15 percent of your income should be going into a retirement account each month.
If you don't have any extra money in your budget for savings right now, check out these nine suggestions to easily save $100 or more each month. Then, put that extra cash in your retirement fund. If you save $100 a month for 30 years and earn an average interest rate of 8 percent, you'll have an extra $137,000 at retirement time.
3. Your savings priorities are all wrong
On the other hand, you could be saving money but have your priorities all wrong.
Yes, college for the kids is important, but not at the expense of your retirement account. The kids can always get scholarships, jobs or even loans if absolutely necessary.
Make your retirement savings a top priority. Again, you should be setting aside 10 to 15 percent of your income in retirement accounts. Once you hit that level, you can start putting money in the kids' college funds.
That may seem like a lot of money to be saving each month, but that's why you aren't keeping up with the Joneses, right?
4. You save your money in the wrong accounts
Another common mistake is putting retirement money in the wrong accounts. A typical savings account isn't going to cut it. Whole life insurance or an annuity aren't fabulous options either.
Instead, put that money in tax-sheltered retirement accounts such as 401k's or IRAs. These accounts come with tax benefits as well as stiff penalties for early withdrawals. That second part is an essential component of ensuring your retirement savings are still there at retirement time.
And by all means, if your employer offers a 401k match, put your retirement savings there first. You'd be a fool to pass up that free money. You can read more about how much to contribute to a 401k account in this article.
5. You finance everything
Today, retailers make it easy to buy everything -- from your furniture to your car to your catalog order -- on a payment plan. However, you'll never have money to save for retirement if you finance all your purchases.
Rather than spend your money on interest, flex your self-discipline muscles and wait until you have enough saved up before buying whatever it is you want. If you keep yourself out of debt, you'll be amazed at how far you can stretch your paychecks. Then you can live comfortably now and bank enough to live comfortably in the future.
6. You've let your credit score go
If you do need to finance something -- houses and cars are the usual suspects -- you'll want to have excellent credit to get the best interest rates and terms.
Otherwise, you'll end up paying sky-high interest rates and sending precious money to your creditors that could be used to bolster your retirement account instead.
Neglecting to maintain your credit score by making timely payments is a major mistake that can lead to destitute retirement years. If your number is on the low side, use these tips to bring up your score quickly.
7. You're a chicken when it comes to investments
Finally, no guts, no glory can apply to your investments.
Sure, you don't want to be dumb about your money; placing 100 percent of it in volatile stocks a few years before retirement is a good way to land you in the poor house. But at the same time, you want to be aggressive enough with your allocations to ensure your returns at least outpace inflation.
That means diversifying your retirement accounts. If you're feeling a bit lost on how to do that and which funds to choose, read this article about how not to stress over your retirement account. While the article refers to 401k funds, much of the same advice applies to IRAs as well.
Retiring rich can be a reality, but you first need to avoid these seven mistakes that can have you destined to be destitute.
More from Money Talks News
- The 10 golden rules of retiring rich
- 5 blunders you're making with your retirement fund
- 13 ways to get more Social Security
We could be richer if it was not for the taxes. The government takes 1/5th of what I make before I even see it. Then we have politicians who think that the best way to reduce our massive debt is to increase taxes.
We all know better. The best way to reduce debt is to cut spending! No more wars, no more giving money to countries that hate us, cut politicians' pay and benefits, smaller military, no more givernment leaches, no more corporate bailouts, no more special interest groups, no more political pandering with tax-payers' money!
2 - SS fraud
3 - Medicare fraud
4 - liberals
5 - gifts to foreign governments
6 - The UN
7 - Obo
You will never retire. Here is why.
1. The government raiding Social Security, bankrupting it, and then blaming the old age pensioners for their piece of crap government's behavior: "You (the people) are nothing but spoiled losers who think they are entitled to a pension."
2. The state and federal governments openly stealing from the promised pensions of their employees. Can you say "under-funded" because it is the same as stealing. And then blaming the old age pensioners for their piece of crap government's behavior: "You (the people) are nothing but spoiled losers who think they are entitled to a pension."
3. The government allowing runaway Medicare fraud, because that is what the lobbyists want.
4. The government saying how every American will change careers on the average of seven (7) times in the working years when the truth is not about "changing careers" but losing your job and having to spend the money you would have saved on retirement on looking for another job.
5. The private pensions, like the 401Ks, being turned over to the professional speculators and money managers who then invested this money in derivatives, CBOs, and the subprime housing bubble, and the resulting "Crash of 2008." And how most of these 401Ks lost between 40 and 50-percent of their value.
6. With the FED controlling low interest rates (ZIRP), the government so desperate for money, they have come up with my[I]RA, which nothing but another revenue stream. your[I]RA will be their[I]RA in no time flat.
7. How, in the face of everything, all the lying, cheating, two-timing, cold-hearted, home-wrecking, pension-trashing, loserdom in both the government, Wall Street, and the TBTF and TBTJ banks, absolutely nothing has changed. The game remains the same.
Number 7. Put money into a rigged, unethical stock market. That's BS. People talk about the crash of 2008. I think about the crash of 2000 when I lost 138000 bucks. After that I said I will never give my money to a suit again. I haven't, and am doing fine being the saver I have always been. YOU are the only one who really cares. Not your life insurance guy, not your banker, not your investment advisor. THEY DO NOT CARE what happens to YOUR money, only that they get a part of YOUR money for a piddly **** amount of work if you are dumb enough to
give it to them.
Americans are not and should not be the slaves and unpaid mercenaries for the rest of the planet, if it takes a stack of dead and maimed politicians and their family members to bring this conclusion, be prepared it will happen!
The inability to be truthful at campaigning time is not something that will allow politicians to actually say that the few Americans that pay taxes will be forever the unpaid, hated and indebted to the hilt and to put their children's lives on the line generation after generation! This is not a reality that even those who are forever on the national teat will even be able to live with!
You don't need to, the government will make up the differnce.
You did not save enough to provide housing in retirement? No problem, the government will pay for it.
Food? Same thing.
Electricity for your air conditioner? Yep, government.
Oh, you need a phone? Done!!! Government will do it.
Why be responsible when you can make some other guy pay your way?
8. 401(k) loans.
Some treat their retirement account like an emergency fund (and not necessarily loans for true emergencies). Establish an emergency fund and avoid loans and in worst cases, penalties.
9. Failing to increase contributions with every raise.
Starting out at 8 to 10 percent is fine, but that is only a start. Review yearly and give your senior self a raise when you get a raise.
10. Failing to realize that saving an amount that has already been taxed is critical.
Tax rates will change - whether up or down, give yourself the option to be able to mitigate future tax hikes by saving a separate amount that has already been taxed up front.
11. Failing to perform trustee to trustee rollovers when leaving an employer for another.
Touch that check and play with potential penalties for not transferring within the prescribed time. Don't forget, making up for the 'touched' check tax is also necessary. So many ways to invite disaster - always use trustee to trustee to help eliminate any chance of disaster. No missteps allowed.
The root of the problem is where these types tend to turn a blind eye, thus their downfall.
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