Let's go back to our earlier example of a 40-year-old, unmarried female investor who earns $50,000 per year. As people live longer, some choose to work into their late 60s and beyond. How much money should you be saving? It sounds harsh, but as U.S. News points out, they have many more years for their own financial planning. It's a fear that many of us have. So you've signed up for your company's 401(k) plan or opened an IRA for your retirement savings.…. Nine years ago I took a leap of faith and moved from Atlanta to New York City. Seeing a gap between your estimated retirement income and living expenses can be sobering. Start all over by walking the path of the Soul, not of the ego. Here's a guide to choosing investments for your retirement accounts. Let's look at an example: a 40 year old, unmarried female investor who earns $50,000 per year and has no retirement savings is looking at a significant gap between her retirement income (only Social Security) and projected expenses. His blog is read by 3 million readers a month and has been featured on Oprah.com, ABC News, Men's Health and Woman's World magazine. Try bartering. When it comes to part-time work, the good news is that more established companies--including Borders, Wal-Mart and Starbucks--are trolling for older staff. I actually had to do this once. Switch to a credit card that offers cash back on your purchases. Now it's time to put your money to work in a retirement account that's right for you. Eckerson offered to give Italian lessons to a female career counselor in nearby Buffalo, N.Y., in exchange for a personality test to gauge job suitability. Take inventory of your skills--no matter how rusty--and see what additional training you need. If you'd prefer to try something new in retirement, consider some of these strategies from Money Magazine. The easiest and often most effective way to get started is through your workplace retirement plan—a 401(k) for most of us. Now that you've put a retirement plan into action, put it to the test to make sure you're on the right track. "There is a retirement plan for everybody. Here's a step-by-step guide to whipping your retirement savings into shape. "I needed help picking out a career, rather than just a job." It’s one of my favorite cocktail party stories. All Rights Reserved, This is a BETA experience. Finally, if you're still supporting your adult children, it's time to tell them they're on their own. 13. You might think you deserve a raise, but convincing your boss of that is another story. Use this bill-by-bill savings guide to find savings on everything from your cellphone bill to your utilities. Nancy Jo Eckerson and her husband used to be quite a team. Check out this beginner's guide to IRAs, and Charles Schwab's IRA calculator to help you make the decision. When we return to our example of the 40-year-old female investor, we can see how working part time after she retires at age 65 could help her support herself. "It was a saving grace," says Eckerson. You might not quit Starbucks coffee cold turkey, but maybe you can brew their beans at home instead of hitting the drive-through every morning. Don't be too harsh, since eliminating everything you enjoy is unsustainable, but be as ruthless as possible. Even delaying retirement until she's 67 doesn't close the gap; she'll need to rely on savings as well. I had $250, a 6-year old daughter, an old car, and some of our clothes. Here’s your guide to protecting yourself. Have you checked your home assessment for a chance to lower your property taxes? Slash spending from your "wants" category by identifying and cutting out unnecessary expenditures. While Eckerson drummed up some quick cash by going to work as a substitute, teaching Italian and Spanish, she decided that she really wanted to be a writer. Next, target your "needs" to see what can be trimmed. Choose a rough estimate based on your earning opportunities, and adjust it as you start earning more money. Adjusting your planned retirement age helps show how working an additional year or two could affect your savings. Consider whether there's an opportunity to continue in your field after retirement, such as consulting at your former full-time employer or sharing your experience at a local community college. Test out different retirement dates to see how retiring a year or two earlier or later could affect your monthly payments. I'm not sure if that's good though, but at least I have the option. Community colleges provide good resources for a second act. Total the amount you'll save each month from these changes. And that's not always a bad thing. Consider, too, that fewer than one in three women have pensions (compared to one out of every two men), and those that do typically receive about half the amount men do, according to a December report by the Institute for Women's Policy Research in Washington, D.C. For baby boomers feeling the sands shifting beneath them--or those who just like to be prepared--there are steps you can take toward terra firma. For more ideas, check out this massive post on making money in your spare time. These will be different for everyone; for ideas, check out the responses from Lifehacker readers when we asked what people tend to cut back on first, When Northwest Airlines laid off 60 employees earlier this month, the pink slips were accompanied…. When starting over at 55, you need to plan on waiting until 70 to begin your benefits. This is your first retirement contribution. Since you're only about 25 or 30 years away from retirement, you won't want to invest as aggressively as a 20-year-old might, but you should still find a good mix of options. Companies with 20 or more people are required by a 1986 law called COBRA (Consolidated Omnibus Budget Reconciliation Act) to extend existing health coverage up to 18 months at the group rate, even in the event of layoffs and most firings. Total the amount of "extra" money you'll have each month. Start with your day job. Another option is to consider working a part-time job once you retire, says Trent Hamm of The Simple Dollar. If your employer doesn't offer a match, you might be better off focusing on an IRA first, but don't write your 401(k) off entirely, recommends personal finance and behavioral psychology expert Ramit Sethi. Earmark that money to your retirement instead. Savings aren't immune, either. Tallying regular income, such as a raise or rent payments, is easier than irregular earnings, such as those from a side business. What about choosing lower-cost meals (like ones from Leanne Brown's Good and Cheap cookbook)? Be sure to look into all your options before you start benefits. And while about half of marriages now end up in separation and divorce, plenty more husbands and wives will stay trapped in miserable unions for fear of braving new, unstable futures. Once you've cut what's reasonable from your expenses, it's time to focus on earning more money. To create a retirement plan that will guide you going forward, you'll need four key numbers: Since these numbers are a vital part of your plan, let's talk about how to identify them. As soon as you get your feet, sit down and map out--in writing--where you want to be five or even 10 years down the road. Vet their track records at sec.gov (Web site of the Securities and Exchange Commission) or at nasd.com (home of the National Association of Securities Dealers). If you're thinking about saving for retirement, you probably know that an individual retirement…. For women--especially those who have been out of the workforce for years--the transition can be particularly tough. Starting over in a new city where you don’t know anyone is exhilarating, life-changing and, at times, heartbreaking — and it’s something I think everyone should do at least once. Make a promise to yourself to spend your life walking on the path of the Soul, not that of your ego. Regardless of your why, it's not too late to take a hard look at your finances, devise a plan, and get some money in the bank. Kyle Taylor is founder of The Penny Hoarder, a popular blog about weird ways to earn and save money. It was many years ago and I was running from an abusive ex-husband. 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Whether you're living paycheck to paycheck or have been blindsided with unexpected expenses, hitting the big 4-0 with nothing in the bank for retirement isn't ideal. We think of the golden years of retirement when people lived a few years on SS or companies had good pensions. For most people, the biggest expense by far is the monthly rent or mortgage payment--in the neighborhood of 30% of pre-tax gross income. You're broke. Calculate how much you need to contribute each pay period to max out the match by the end of the year, and set up automatic transfers from your checking account after each payday. Remember to consider any potential income you might have in retirement. Even small contributions count: you can open an IRA with as little as $10, and that money will grow over time. Remember: Deal with the hard retirement questions early--the answers get even tougher as the years tick on. If you're ready for a big change, consider downsizing your home. Here at Livability, we focus a lot on where to move: the best cities to find a job , the best places for travel addicts , the Top 100 Best Places to Live in America , etc. Eckerson's woeful tale is all too common. After taking classes in writing and publishing at the local community college, she is now working on illustrated non-fiction books for children. They may not earn as much, but they'll protect you in case of a rollercoaster market. Add any windfall money — like a birthday gift or a tax return — to your retirement accounts to boost your bottom line. Use these Starbucks hacks to maximize…. Deciding whether to own or rent is tricky, especially in a slumping housing market. Then came divorce in 2000--and at age 50, one month shy of her 25th wedding anniversary, Eckerson found herself without a home or an income. Sadly we can also say that if you have little to any savings by 40's and later, perhaps true retirement isn't in your future. Bookselling giant Borders, for example, wants employees who read a lot--and who better reflect the demographic makeup of the areas they serve. While she had poured her life (and a small inheritance) into the food business, as part of the settlement, she had to fork over her stake in the house and the restaurant to cover her share of debt the couple had accumulated renovating the turn-of-the-last-century building. Almost half the respondents of the Federal Reserve's latest Report on the Economic Well-Being of U.S. Eckerson's one saving grace: three years of experience teaching foreign languages to high school students, though that was back in the 1970s, and she had long since given up her certification.
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