Do you know how to save for retirement?

A Sobering Statistic

The majority of workers save for retirement (68%), but nearly half (46%) have less than $10,000 in savings and investments according to the Employee Benefit Research Institute. Not surprisingly, half of all workers don’t have confidence in having enough money to live comfortably throughout their retirement years. If you feel that retirement is an elusive dream, planning is the key to reaching your goals.

Don't Wait -- Start Now

The best time to start saving for retirement is now. When you’re younger, it’s easy to not think about retirement, especially if it is 30 years away. Because of this, a lot of individuals procrastinate when saving for retirement. Others may have to attend other obligations first or may not be able to afford to contribute any amount. The biggest question is can you afford to wait? Let me ask—Do you understand the time value of money?

Pay Yourself First

One of the oldest and most successful ways to save is a method known as “Paying Yourself First.” As it says, you need to prioritize retirement first and you can do this by deducting the savings directly from your paycheck. Now, you are guaranteed to save first. When you are using the retirement plans at work, chances are the retirement savings are automatically taken from your paycheck, so you don’t even have to worry about budgeting for it. Additionally, in some cases, the effect of retirement savings on income is very minimal because of the tax savings.

Investment Expenses Do Matter

Just because it is a no-load mutual, don’t think it is free. If you compare two mutual funds with expense ratios of 1.3% and .2%, an investor would have an additional $31,701 after 20 years on a $25,000 investment. This information is readily available today on fund expenses.

The Latte Effect

Estimates are that you can save $2,425 a year by skipping the morning Starbucks and by packing your lunch 2 days each week. Over a 20-year career with a modest 5% return, you will have accumulated an additional $84,194. Now that would buy a nice vacation.

Tips for Retirement Savings

      1. Make saving automatic—enroll in automatic accumulation plans.
      2. Annually, be sure to max out your retirement savings contribution.
      3. Start early—for the average person it is about steady, long-term investing.
      4. Live modestly—most of the time you would not recognize a millionaire.
      5. Use annual bonuses and raises to save for retirement, don’t spend them.
      6. Play catch—up and use the additional contributions available for people over 50.
      7. Get out of debt as soon as possible, it can be done.
      8. Find out how much your Social Security payments will be. It is important to understand how much you have and how much you will need.
      9. Keep working as long as possible, even if it’s just a job to keep yourself busy. Studies show that the average retirement age is increasing every year.
      10. Pay cash whenever possible and avoid the urge to splurge.

If you have any questions about this article and would like more information, please feel free to contact Midland at 239-333-1032 or