Oct 20 2017

National Save for Retirement Week

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Carrying forward a post I stuck on Facebook:

 

Someone somewhere declared this “National Save for Retirement Week.” Ok, it’s as good of a time as any to evaluate your progress.

Vanguard has some helpful ideas here:

In my mind, there are 4 main factors to consider when saving for retirement:

1. How much money you’re investing. (Employer-sponsored plans, including any potential match; IRAs, regular taxable investment accounts when the first two options have been exhausted).

2. Which investment options you’ve selected. Each fund has a purpose and is designed to meet particular goals. Make sure they are YOUR goals and are appropriate for your situation.

3. Asset allocation. Are you dumping it all into one target-date fund where the asset allocation happens automatically? Or are you handling the asset allocation and rebalancing yourself?

4. FEES. Do not overlook fees. High fees will eat into your returns, costing thousands over time. Some employer-sponsored plans might have a higher fee, say 1-6% or more.

There might or might not be much you can do there, but pay attention. You can control the fees associated with your IRA, as you’re the one in charge. My target-date retirement fund at Vanguard has a .16% expense ratio, for example. Some Admiral funds at Vanguard have even lower fees, .04% is an example — VTSAX Vanguard Total Stock Market Index Fund Admiral Shares. Nice.

Here is an investment fee comparison calculator so you can see the difference. I like this article on NerdWallet showcasing the impact in an example portfolio.

It can feel overwhelming, but this is your life. This is your money. You can handle this.


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Oct 18 2017

The Workers Who Will Retire with More Money Than Everybody Else

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This blog uses affiliate links and maintains financial relationships with various partners. This is a guest post.

 

According to a survey conducted by NerdWallet, millennial parents are out-saving parents from all other generations when it comes to retirement.

In most cases, there’s a wide margin: the NerdWallet survey found that amon

g all those who are saving for retirement, the millennial parents are contributing an average of 10% of what they earn on a daily basis to their retirement money. As for the Generation X parents, they are contributing an average of 8%. Baby boomer parents, on the other hand, were contributing an average of 5% of their income to retirement. The respondents of the survey question were all employed, which means that the retired baby boomers didn’t skew the contribution rate of the generation.

The survey, conducted by Harris Poll of NerdWallet, inquired more than 2,000 adults living in the United States. Among the people who participated, 1,112 of them were parents and about 870 non-parents. All of them were asked regarding their habits on retirement savings. The habits that stood out the most were from millennial parents. Despite being too early in their careers as well as having lower incomes, they are saving a large portion for future use.

The Financial Secrets of Millennial Parents

 

 

There are specific ways millennial parents use to get their financial houses in order. Let’s take a look at some of them below:

 

Getting a Grip

Millennial parents know that it’s impossible to map the path to retirement if you have no idea on how close you already are. Money-savvy people track their expenses, assess the value of their current investments such as vehicles and home equity, and calculate their net worth. Lots of millennial parents are making use of retirement calculators that model their cash flows. They allow you to see the amount that’s coming in and out. They’ll also reveal the likelihood of money to run out.

 

Eliminating Expenses

This is a fairly simple investment strategy of millennial parents: careful tracking of finances. If possible, you have to ruthlessly eliminate unnecessary expenses for you to be able to save as much money for retirement.

Anything that you commit to that is a regular expense, and you’ll need 300 times the amount saved in order for you to fund the same amount of money in retirement. The number one expense that you must focus on ditching is your mortgage. If it’s a $250,000 mortgage and you clear an extra $300 monthly, then you will be able to shave off a full decade of payments.

 

Income Diversification

Diversifying retirement investments is essential and that includes having multiple streams of revenue. If you have the time to learn how to trade and you have always been curious on the subject, you can open an account at CMC Markets. If you master the skill, you’ll be able to have a predictable and consistent cash flow. We also advocate “income investing” as it provides retirees with cash flow that’s generated from interest on bonds, stock dividends, and REITs.

 


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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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