Archive for January, 2012:
You know how to cut your expenses mercilessly, stretch a buck, and live frugally. You can come up with endless ways to entertain your children for free or almost free, feed your family on a few dollars a day, and make sacrifices on things that don’t matter to you (and sometimes, things that DO matter to you) to improve your family’s finances.
When it comes to large-scale money issues such as retirement, some of you are well on your way. Others are still figuring out the details.
A few years ago when I started working the drugstore deals, it was around the same time that we were starting our first retirement plans. I thought if we chose a few of the different 401k funds available to us, that we were properly “diversified.”
In reality, I picked the funds out of nowhere. “Small cap”? Ok, how about 30% to you. Nevermind that I had no idea what that meant. “Target Date”? Sounds important. Better make it 50%. And so on. I had NO idea how to choose an investment properly and I didn’t know what to do to figure it out.
Actually I can’t remember the exact investments we chose 4 years ago, or the percentages. We’ve long since made adjustments, but the above illustrates my past mindset with it all.
I’m convinced that if you can put together a complicated drugstore deal scenario, then yes you can absolutely find your way around an investment prospectus. You can select high quality, low fee investments. You can figure out how much you’ll need to retire, and take the steps needed to get there.
Even if drugstore deals aren’t your thing and you feel like you’re pretty new to this retirement stuff (or money stuff in general), you can do this.
If you are overwhelmed with retirement planning or simply don’t care, know this: Barring serious illness or a catastrophic accident, you’ll likely live into your 60s, 70s, and beyond. It’s a-comin’. Are you ready?
Unfortunately, many people cannot afford to leave the workforce, even though (or possibly because) they may not be in the best of health.
“More than three in five U.S. workers in their 50s and 60s plan on working past 65 — and 47% of that group say they’ll do so because they’ll need the money or health benefits, according to a 2011 study from the nonprofit Transamerica Center for Retirement Studies.” — For many seniors, there may be no retirement (Wall Street Journal, August 21, 2011).
Shocked? Scared? Could that be you? Does that statistic reflect what your parents will need to do?
The reality is, saving enough for retirement impacts more than just our self and our spouse. It impacts our children, and possibly even grandchildren.
You may never want to officially leave the workforce. Maybe you love your job, and never ever want to leave. But, you can’t know for sure what your health will be like in the future. Perhaps your job has changed, or your priorities are different. It’s better to save for retirement now, and choose to keep on working for the fun of it, than get to your 50s and realize you will either retire destitute, or will need to work until the day you die.
Yeah, I’m painting a bleak picture. But we’d be better off to shudder at the horrors of what might have been, had we not prepared — than have that be our real circumstances.
Here’s where I come in. I’m no expert, you all know this already. But, I’m going to do my best in the coming weeks to post about retirement in a way that is manageable and relevant to you. I’ll be linking heavily to people who know what they’re talking about, too.
Some of you are retired already. Some intend to retire in the next few years, maybe. Many of you are in your 20s and 30s and are just starting to get some momentum on building your investments.
I’m certain there are some of you who already have a solid grasp on retirement planning and I hope you’ll be active in the comments section to help us learn from you. Actually, I hope you’ll all participate in the comments section (and feel free to email me) to help guide where this series takes us.
The majority of you who voted in my poll told me you wanted a blog series. Ok!
I’ll have a once-per-week posting schedule for retirement stuff, starting Wednesday (and running on Wednesdays thereafter). On other days, I’ll post more my usual topics. This series will likely take a few months. I thought I’d better do it that way rather than flood you with too much info too fast and make you mad and unsubscribe.
Topics will include:
- Determining how you want to spend your retirement (Wednesday’s post!)
- Figuring out how much that lifestyle will cost
- How much will you need to save, and how to evaluate retirement calculators
- Where to invest? And how to pick your investments?
- Asset allocation, expense ratios, and all that fun stuff
- Target-date funds
- How Social Security and pensions come into play
- Whatever else comes up, as spurred by your comments
I’m keeping links for the series, as well as additional info and resources on a new page called “Retirement Guide.” You can find it at the top in my navigation bar.
By the time I wrap up this series, I hope that you’ll have a better understanding of your financial situation. I hope you’ll feel confident with the lingo and how to make these important decisions for yourself.
My goal is that in the next few weeks, you’ll not only have your retirement accounts opened, but you’ll know exactly what investments you want, how much you want to contribute, and you’ll know how it will impact your future.
Ya with me?
I thought Vivienne’s runny nose and fussy attitude was solely because she was cutting teeth. And then Johnny joined in on the unfun, and has a runny nose and feels lousy, too. He has all his teeth. Oh, baby colds. Hope they can get well soon. That’s all I got this week. Here’s the roundup:
I was included in this week’s Yakezie Carnival, with my post on how small amounts can have a big impact on the mortgage
Callie = Joy — You won’t want to miss this photo essay, showing a couple whose first child was stillborn. I can’t even imagine their grief. But it was great to celebrate with them when their second child was born, screaming! Beautiful!
How much is $20? @ So Over Debt. It’s not much, in theory, but can be a big deal psychologically. And saying, “Oh, what does it hurt to spend $20 on this?” can lead to financial problems.
Should I prepare my own taxes? @ LifeHacker I thought this year would be the year we hired out our tax prep services. I had always done them myself in the past with Turbo Tax or the H&R Block software. The 2011 tax year is our nuttiest by far — two states, a move (and deductions for that), my business income, buying our house, sold some stock, and on and on. And yet, I *think* Turbo Tax can still cover me. One CPA quoted me at $600-800 to do our return (um, what?) and Karen told me that was nuts and encouraged me to shop around. The next firm put me in the $250-300 range. I’ll save even more if I do it myself, but only if we can catch all of our deductions. We’ll see.
How to save money on clothing@ Saving Advice Good stuff! I’m finding that I prefer to buy shoes and scarves right now — things that fit me at any size.
11 things you may not know about retirement accounts @ Get Rich Slowly #5 was new to me! I’m going to see if we can do this.
Home workout programs can be a cost effective way to work out @Bible Money Matters. Going to a gym just isn’t going to work out for me right now, unless I can figure out how to get up early. I’ll stick with home stuff for now.
What I would feed my family on $250/month and How I would improve my budget even more @Keeper of the Home. Wish I could have written these posts! I’m still a ways off from figuring out how to cook whole foods on a budget. I can do “budget” cooking or “whole food” cooking, but combining the two? Still working on that.