Vail Daily column: Nearing 50 without a plan?
Managing your money at any age is difficult. When we were young and living at home, it was easier to save money. At this phase of life, bills such as rent, mortgage, telephone and utilities were usually paid by someone else. If we had a job, often our income was for us to enjoy. Unfortunately, as we got older, things changed.
Once we left home and got that first job, learning to budget and save was difficult. That old budget and the discretionary funds that were manageable when we were young and single changed as we got older. With age, our perceived needs and responsibilities changed. Deciding to pay for things like rent, mortgage, transportation, food and entertainment took on new levels of importance.
PLANNING FOR THE FUTURE
While budgeting for the here and now can be tough, budgeting for tomorrow and the future can be quite challenging. Figuring out when to start saving for a home, a new car, a child’s education and eventually retirement is often a learn-as-you-go experience. Unfortunately there is no one rule fits all guideline to follow.
So here is the killjoy question: When do people start to save for retirement? Because traditional pensions have long disappeared and workers are now more responsible for financing their own retirement and health-care costs, many conventional financial advisors suggest saving 15 percent of your salary for retirement. For people who are trying to pay off college debts, starting a family and buying a house, this may not be easy.
Retirement saving necessitates sacrifice, and it’s definitely not something you can push off and hope to achieve later in life. Even if you get a late start, hit some rough financial patches or just fall short of being a perfect saver, a viable retirement plan can be derived.
I’d like to share some information that I have read from Prudential Investment Management Services, J.P. Morgan and Edward Jones.
Get started right away
Forget the past. Your retirement planning begins today. By making the right moves, you can lay a foundation for a more financially secure future. Doing something to save for your retirement is always better than doing nothing. A good course of action is to develop a written retirement savings plan and work with an advisor to develop and maintain a long-term diversified investment portfolio. (Financial advisors can help people of all earning brackets. Don’t think that you don’t make enough to see one!)
If your employer offers it, invest as much as you are allowed into a 401(k), IRA and/or Roth IRA. If you are self-employed you may be able to start a simplified employee pension (a solo-401(k)) and a IRA and/or Roth IRA. You too should invest as much as possible.
Finding the money to save
To help find more money to contribute, take a look at your current budget and expenses. What are you willing to give up today to make an investment in your future? There are some obvious possibilities — the daily gourmet coffee or eating out, for instance. Want to dig deeper?
• Raise the deductibles on your homeowner’s and car insurance policies.
• Cut back on your cable and/or Internet service.
• Find a cheaper cell phone plan.
• Drop your gym membership (and exercise at home).
• Cut your dry cleaning bill by washing certain garments at home.
• Pay your bills online instead of by mail.
• Keep your car longer.
• Re-evaluate your life insurance needs to see if there are cheaper alternatives.
• Sell some possessions that you no longer want or need.
You don’t have to give up all of life’s luxuries — but making some adjustments here and there and contributing the amount saved to your retirement plan account can make a big difference over time.
Judson Haims is the owner of Visiting Angels Home Care in Eagle County. For more information, visit http://www.visitingangels.com/comtns or call 970-328-5526.