Importance of Saving for Retirement

Although there are many people out there who have company sponsored pension plans many of do not. My company does not have any sort of retirement savings plan other than the mandatory government retirement plan that they are required to remit contributions to so its all up to me to secure my own retirement future.

How Much Money Do I Need to Save?

Generally if you have a company pension plan then the rule is that your pension plan should cover at least 50% of your retirement needs and government plans another 20-30% leaving you needing to save about 20-30%. However if you do not have a company sponsored plan you will need to save 70-80% of your retirement income on your own. Also keep in mind that there have many instances where companies have reduced employee pension benefits or sometimes even bankrupted the pension plan entirely. Therefore it is up to you to start saving to give you peace of mind.

Saving for Retirement in Your 20s

Of course the earlier you start saving the better but for most people in their 20s they are busy paying down student loans and trying to save for the down payment on their first home. Keep in mind that something is always better than nothing and even if you are only contributing a small amount that you are still getting into the routine and discipline of making weekly, monthly or annual contributions. For example if you were to save $50 per month at the age of 20 which is about $25 per pay cheque you would have approximately $8500 at the age of 29. Now you might say that you certainly aren’t going to retire on $8500 but its $8500 that you wouldn’t have had in that account if you had completely ignored saving for retirement while trying to pay off those school loans.

Saving for Retirement in Your 30s

Saving for retirement in your 30s can be just as difficult as saving in your 30s because you often aren’t quite established in your career and the financial burden of starting a family is also taking its toll. Again its important to “pay yourself first” and make sure you’ve set aside money each month or pay cheque to deposit to your retirement account. Using the above example if you started with $8500 at age 29 and saved $150 each month you would have approximately $41,500 by the time you reach age 39. This amount alone without any further contributions would grow to approximately $151,750 by the time you reach age 59 or $225,000 if you continued to make those $150 per month contributions.

Retirement Planning

It is important to start early and outline a retirement plan for yourself. At what age do you plan on retiring? Will you work part time in retirement? Do you plan to travel or start new hobbies? If so how much per year is this going to cost you?

It is important to quantify your yearly retirement needs now so that you can stay on track to save enough for your dream retirement. You don’t want to get to age 55 or 65 and all of a sudden realize that you aren’t going to be able to take all those trips you’ve been dreaming about right? Plan now for your retirement future.

Saving for Retirement Calculator

There are dozens of online retirement calculators that can help you determine how much you will need to save and how often.

For Canadians the best retirement calculator to use is the one found on the Service Canada web page. It will give you a detailed breakdown of all your sources of retirement income including your estimated government pension benefits.

For US citizens FINRA has a great Retirement Calculator that you can use to estimate how much you will need to contribute annually based on your current retirement account balance, your current age, the age you wish to retire and so on.

So start investing now to secure your retirement future, we all want independence and security in our retirement and only you can make that happen for yourself. Remember the saying “pay yourself first” so that there is never an excuse that there just wasn’t enough money left at the end of the month or pay cheque.

So much for the benefits, here are the ways in which you can effectively save some money without using those age-old habits quite inappropriate these days. Bid farewell to your cute piggy banks and save a great amount of cash with the following tips to save money:

· Control your expenses and spend less than you earn.
This is the key in ensuring that you will really save money. Examine all the things where your money goes and decide whether you still need them or not. Abandon your addiction to expensive clothes, cars, or shoes, since they may well be the main reason that your money is frequently used up. Also, start using or buying the alternatives for those things you need. This may boost your savings as well as your resourcefulness.

· Take advantage of sales.
Purchasing from sales is the perfect way to buy your dream item at a lower cost.

· Save, save, save!
Saving is really the best thing you could do. You can set aside some money for your savings regularly. You will not even notice how big your savings will be!

· Give attention to your mortgages.
Mortgages contribute a lot to your debt and expenses. It is very important to settle them early so that they will not incur further interests which could be a threat to your savings.

· Credit Cards
Credit cards often account for your large debts. Just pay all the incurred balances and make sure that you will never spend more than you can pay next time.

1) The cost of living across Central America is well below what most people are used to at home.  Nicaragua is the cheapest destination according to PPP data from the IMF, but Belize, Costa Rica and Panama all offer a luxurious lifestyle (with a full time maid if you wish) for far less than it would cost in the US.

2) You get to choose you climate zone.  Some retirees love the coast and their dream is to find an beach-side home to call their own.  Others retreat to the hills for cooler temperatures, and seek out Boquete real estate in Panama, the Central Valley of Costa Rica or the highlands of Matagalpa in Nicaragua.

3) No longer do you have to bump along bad roads to remote areas miles away from shopping and entertainment.  Now you’ll find real estate in central locations with vibrant expatriate communities and all the services you need.  Top picks for us would be real estate in San Jan del Sur, Nicaragua or, for a touch of the Caribbean, Ambergris Caye real estate in Belize.

4) A new culture awaits.  When you move abroad you’ll be entering a new culture and a new community.  Everywhere in Central America, except Belize, Spanish is the main language.  You’ll find things more laid back and, yes, slower.

5) A wide range of benefits and incentives are available for retirees who qualify for special retiree programs.  Central America is keen to attract retirees so some of the benefits are very tempting and result in large savings.  The details are different country by country but most offer household import tax and property tax exemptions.

Overseas living may not be for everyone.  You may miss some of the conveniences or feel frustrated by the slower bureaucracy.  So if you’re at all tempted, a great idea is to rent first and test the lifestyle before you take the plunge.

The basic function of 401k rollovers to IRA is to give you more control of your money. Within the confines of a traditional 401k structure, your fund options are limited. If you open and roll your money to an IRA, you have all the funds that the firm uses at your fingertips. This can be both good and bad, depending on your temperament. If you have the discipline to research the funds and take a long view of their performance, then an IRA is a great idea. You can have your money working smarter for you. If you fancy yourself as a day trader, then your nest egg will erode in the face of transaction fees. As the Greek philosopher said “Know thyself.”

You actually don’t have to be in transition between jobs to consider a rollover 401k to IRA. With most plans, you can decide to do it any time. Do check with your admin person. What are the 401k rollover to IRA rules? One of the nicest benefits to a rollover is that the money that initially lands in your brand new IRA is not considered as part of the year contributions when calculating the contribution cap. In other words, if you put in $20,000 into your IRA as a rollover, you still have the maximum contribution available to you for that calendar year. It is a great way to turbo-charge your IRA!

Many people, as they consider a 401k rollover to traditional IRA, worry about splitting their retirement funds, and about having enough money to fund more than one account. If you have got a budget under control, this should not be a concern. If you can afford it, put 7% of your paycheck into the 401k and 7% of your paycheck into the IRA. That means you are putting just 14% of your pay to retirement. It’s double what most people do and still conservative by any measure.

The retirement annuity is simply a deferred annuity contract that allows you to continue the payments for the lifetime of the annuitant. This is particularly appealing for retirees as it ensures that their income stream never runs out.

Your current situation determines a considerable amount of the strategy and reasons for owning an annuity. Although the standard single premium life annuity is a popular choice and is often associated with wealthy individuals, just as many people accumulating their fortune are using annuity products.

When you have retirement annuities explained in regards to your situation, the functionality of the product becomes quite evident. There will certainly be more to the contract than simply allocating a sum of money that will last for you through retirement. This is where the help of a professional or experienced planner can become quite useful. A good planner will be able to help you design your income plan so that your needs and goals are met during your retirement years.

Far too many seniors have found themselves with inadequate savings to last them through retirement. When you consider the life expectancy estimates are an indication of the average, 50% of seniors will live beyond their life expectancy. By providing yourself a contract that continues to pay distributions until the individual passes away, you ensure that you are not among the growing number of seniors citizens living in poverty and being forced back to work in their later years.

Managing your personal finances gets complicated fast, but budgeting by using envelopes can take the pain out of the process and make things easy to follow. Let’s say you want to plan for some health and fitness equipment, you just add an envelope for that expense.

Your first step is to put together a spending plan, or budget, to represent your planned spending over the next few months. This is a good practice to have in order to keep good control of your money. When you have the spending plan drawn up, you can begin to see where your money goes each month. You will have your income, your expenses and the surplus at the end of each month.

Once you have this completed, you are ready to use the envelope system. For those important categories of spending, especially the ones that tend to runaway from you  you will want to have a simple envelope to keep your cash inside. Use one envelope for each category.

The advantage of the envelope system is that you allocate a set amount of spending to each major category. Once you discover that an envelope contains no more cash, then you can spend no more money. This stops your spending getting out of control. If you do want to spend more one month on clothes, for example, you always have the option to decide to spend less in another category, and you can move some money between the envelopes. This keeps some control but allows for the flexibility needed in real life.

Budgeting by using envelopes can often beat sophisticated computer spreadsheets because it keeps things simple and has a build-in control to stop overspending. Why not try it today? Once you get the budget under control, being able to retire early is within your reach.

A Rollover IRA is used to hold assets which have been distributed from a retirement plan of an employer, such as a 401(k) or Profit Sharing Plan. The amount of money you can rollover is unlimited.

A rollover from a 401(k) into an IRA retirement plan opens up an option for a new investment that is unavailable from your current 401(k) custodian. There are three simple steps to complete a rollover. Firstly, terminate employment from the employer of the 401(k) that you want to transfer. Then, you have to open a Rollover IRA account. While opening an account, you must get the exact address of the financial institution that your 401(k) custodian should send your funds. Secondly, you must move your assets from your former employer’s 401(k), 403(b), and other employer sponsored plan once your account has been opened. Lastly, invest your assets. There are choices of investment products to choose from. These choices include mutual funds, stocks, bonds, and ETFs or saving products like money market, savings, and CDs.  Thus, it opens an array of products that will surely fit your needs.

If you find the steps difficult, there are experienced Rollover specialists that will help you with 401k rollover advice and the entire process. The Retirement Help Desk has associates that will gladly answer your inquiries, guide you in the processing of papers or paper works, and even in calling your previous  employer’s plan administrators to initiate your Rollover once your account has been opened. Then the plan administrator will forward your Rollover check and it will be gradually deposited in your account.

It has simplified management that allows you to track your progress easily. One good thing is that you can log on to view your savings account and access on your retirement account information found on the same page. See how you can easily access to your money? So start making moves in order for the 401 Rollover to IRA to be successful.

We’ll assume a small investment amount is $5000 dollars. We’re also going to assume that you can find 8 people that all want to contribute to the investment pool. This is a great way to leverage your money. Now we’ve got a total of $40,000 to purchase a piece of real estate with to flip.

We can purchase a foreclosed single family property for about $30,000 dollars that will definitely need some work, so we’ll put the $10,000 dollars we have left over into it in order to renovate, repair, and upgrade both the interior and exterior. You end up with a very nice house that has under $50,000 invested into it. Now the property can be sold for around $60,000 dollars, giving a total profit after expenses of $20,000.

When we split profit 8 ways, each investor gets a return of $2,500 dollars. Now $2,500 dollars doesn’t seem like a lot of money, until you compare that to your original investment. You are getting a 50% return on your money. That is an incredible return in even the best of markets.

This is a perfect example of small investing.  People always ask how people get started in real estate investing.  These people assume that you need over $100,000 dollars before you can get involved in your first investment.  If you and a group of friends can do three to five of these smaller investments, each of you can eventually go out on your own and do them separately.  Starting out as a group also helps to lower the risk by spreading it out over the entire group.

A lot of people are fascinated and think it is the stock market for dummies it is so easy: buy a stock, hold on to it for awhile and cash out later with a gain.  However, there is a lot more to it than that and certainly more complicated than just placing your money in a certificate of deposit that is risk free at the bank. There is nothing at all about stocks that are safe and with the 1000 point drop midway through the trading day on 5/6/2010, that must be quite clear.

In return for the risk you’re taking with stock investing, you’ve got the opportunity to get a much larger return than you do with Treasury bills or CD’s. However many stock traders that are just starting out are probably not prepared for the every day fluctuations they’ll see after they start buying and selling stocks.

Having the ability to accept down days along with the up days is a much needed trait that it takes time to aquire. It is a lot more than just learning how to buy stocks for beginners. Many novice traders find they only just don’t have the nerves for the daily stock price fluctuations they will have to deal with. The market volatility and watching your stocks go up and down by the hour is one thing that not everybody can deal with.

To some, investing in stocks feels similar to gambling. Once you own a portfolio of shares, your money is always in play. Determining when to buy and when to sell at any point in time is definitely a realized talent that’s difficult to acquire. Having the ability to deal with prolonged bear markets is something that many people find, after the fact, is too hard for them to do.

In the event of an accident on the premises, anyone from the public has the right to sue if they believe that somehow your business is responsible for their injuries. For example, wet floors that cause falls can be hazardous and have sent more than a mere handful of business to court.

One of the benefits in such cases is that your coverage should include liability coverage should the injured individual be awarded any damages but it should also cover all or part of your legal fees. This way, frivolous lawsuits won’t cost you an arm and a leg when it comes to defending your business.

Damaging another’s property is also cause for carrying a good policy. It’s not as hard as you think to find yourself in a position that you need to pay out for customer losses due to business related damage to property. If you or one of your employees drives any type of moving equipment or heavy machinery and causes damages to a customer’s car, you will be legally required to make restitution.

If your business requires that you enter your customer’s home you will find that small mistakes can lead to costly repairs. Anything from a plumbing mishap to backing the company van into the customer’s car while leaving their driveway can be covered under your policy.

There is no doubt that you need public liability insurance if you own your own business. It’s the only way to legally protect yourself, everything you’ve worked for, and your customers in the event of an unfortunate mishap. One bad moment can ruin everything if you are found to be uninsured.