investment

Tuesday’s Tip: Take a Retirement Readiness Quiz – Part 1

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“Are you ready for retirement?” Gail MarksJarvis (a money expert) asked in a newspaper article. When I read that question, I immediately thought to myself, Heck yeah, I’m ready to retire! Not work anymore? Count me in! Then I read the next sentence, which explained that she didn’t mean ‘not work anymore’, but rather ‘do you have enough money to retire and do you know how to make it last?’ My shoulders instantly sagged like a failed soufflé. What really made me sad, though, was my next thought: WILL we have enough money to retire? And can we make it last?

Nowadays, with the economy being what it is, it’s hard to figure out just how much you’re going to need. And even if you do have money saved up, do you know how to make it last so that you’re not eating peanut butter and jelly or beans every day for the rest of your life?

So, let’s begin by focusing on the first question: Do you have enough money for retirement?

Obviously, the goal here is to have plenty, but how does that translate to yearly savings? How much should we set aside per year to make sure we reach that goal? Are we saving anything at all? Is it enough?

According to the March 2015 survey conducted by Bankrate.com, Chief Financial Analyst Greg McBride says that approximately 28% of the 1000 people surveyed are putting away 5% or less, while 16% are saving nothing at all. That’s a little scary. Almost half of the people surveyed have little to no savings. The good news is that 24% are stashing away 6-10% of their income per year, and about 24% are saving 11% or more per year. McBride adds that the middle class are doing the best job of saving. He says that’s because they’re taking matters into their own hands, knowing they’ll have to do it all themselves. “They don’t have the six-figure income to fall back on” to pay for everything later in life, and “nobody is going to do it for them”.

It’s not hopeless. But the questions still remain: Do I have enough? How much will I need when I retire? How much do I need to save every year until then?

Thankfully, there are many calculators available to help you in your quest to be able to eat and be comfortable once you retire. Try heading to http://www.bankrate.com, hover over the Retirement tab, then choose Calculators from the menu. They have everything from 401(k) and IRA calculators to Social Security and investment calculators. There’s even an Investment Goals calculator you can try. Then take a look at your current finances to decide if you’re saving enough to get you to your goal. Remember that all the numbers are approximate. We can’t possibly know exactly how much we’ll need, but we can make a well-educated guess and shoot for it.

Yes, you want to live your life now, but you also want to make sure you can live out the rest of your life with a little comfort, right? McBride says, “It doesn’t matter how much you make, it’s what you have left over” that’s important. The best thing you can do for yourself now is to make sure you’re living within your means. A good way to do that is through smart money management. Need some help with that? Click on the “Buy it” tab at the top of the screen. There’s a little book that can show you the way . . .

Tuesday’s Tip: Invest for Your Future

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As the last post regarding what to do with your tax refund, I’d like to suggest beginning to set aside some money for you. I’m assuming that you’d rather not work until you’re 96, so now is the time to stash away some cash for your retirement. Some of you may think ‘Oh, I’m too old to start saving for retirement’, or ‘I can barely get by on a daily basis, how the heck am I going to save for the future?’. Well, guess what? It’s never too late. And if  you’re in a pickle, financially, then it’s time to fix up the engine so you can get behind the wheel and go where you’d like to go.

If you participate in a retirement savings program through your company, like a 401(k), good for you. That’s fantastic. But to be honest, I wouldn’t necessarily count on that as your sole source of income after you retire. In this day and age, you need to cast your net a little wider to ensure you don’t have to eat peanut butter and jelly for the rest of your life.

There are several different coffee cans to toss your spare pennies into, like bonds, CDs, mutual funds, stocks, money market accounts, IRAs, and such. (I’m not going to give you any kind of advice about which ones are performing well or suggest that you buy into any one fund or stock. I’m merely pointing out that you have options.) These types of investment opportunities are separate from a company-sponsored 401(k), so it’s up to you to decide how much money you want to invest – and then you make the deposits. You can do that monthly, quarterly, yearly – whenever you have some extra cash to throw at it. That’s why I suggest using your tax refund money to get you started. If you don’t need it, why not put it to good use? But let me throw in a word of caution: if you’re going to make this one of your priorities, make sure that you keep up with it. There’s no sense in opening an account if you’re never going to contribute to it.

If this sounds like something you’d be interested in doing, then hop on the computer and do a little research. Visit the websites of different investment firms in your area, find out what they have to offer, and then make an appointment. A professional financial planner can answer any questions you may have and will give you advice about the best places to put your hard-earned cash.

And just so you know – he or she will probably ask you what your goals (a.k.a. priorities) are in life. Maybe now would be a good time to brainstorm . . .

Tuesday’s Tip: Invest in Your Kids

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In this week’s installment of ‘what to do with your tax refund’, I’d like to suggest that you invest in your children. Invest in their futures. “You mean, like, save for college?” Well, yes. And no. There’s more than one way to give your kids a helping hand. Even if you don’t have kids, but will, keep these thoughts in mind for future reference.

If you have visions of sending your kids off to college someday, you may want to consider a higher education savings program. And by ‘higher education’, I mean anything beyond high school. There are several options out there, and that can get pretty confusing, so it’s best to chat with a professional who can sort it all out for you and help you decide which way to go. Every investment firm has people to help you, or you can ask a friend or colleague to recommend one. I’ll be going into a little more depth about these options at a later date, but for all intents and purposes, today, I’m just trying to plant a few seeds for you. One word of advice though . . . start as soon as you can and then stick with it. Or start with your refund and do what you can when you can. Every little bit helps.

Another way to invest in your kids is to get them involved. Use the refund money to pay for music lessons or to learn a sport. Both activities teach kids how to be valuable members of a group, develop fine motor skills, and improve self-confidence. Sports help kids maintain healthy lifestyles and weight, and studies have shown that kids involved in music do better in school. So, not only will your kids be active and engaged, but the skills they’ll learn will teach them discipline, cooperation, and that hard work pays off. Who knows, their talents may even help them into college, if that’s their dream.

If your child is completely against music or sports, there are other options to pursue. There are classes they can enroll in through libraries, park districts, and even local community colleges. If your child has a talent for creating delicious meals, then try a junior chef class. If he or she has a knack for computers, there are many classes that focus on things from program or gaming design to architecture. And if your kid loves photography, try one of those. The possibilities are nearly endless. Talk with your children about what interests them and move forward from there. There are lots of inexpensive options if you spend a little time doing some research.

I could go on and on about the benefits of getting kids involved in all kinds of activities, but I’ll save that for another time, maybe. But for now, I’ll just make the humble suggestion of putting your tax refund to good use by using it to pave the way to self-discovery and to help build their futures . . . whatever they may be.