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How Much Do I Need to Save?

Frequently I’m asked by folks how much they need to be socking away for retirement. Many people I talk to are concerned about having enough (a very common concern I would say among most people) for retirement and fear running out of money. As much as I would love to give them a rock-solid answer and as much as they want a definitive answer, the true answer is that it depends – on a number of factors. 1. How much do you plan to spend in retirement? This question can be difficult to answer especially if you’re young and can’t contemplate nor even come close to an estimate of what expenses will be in retirement. For others, this may be more readily a number to come up with especially if one is close to retirement or in the peak accumulation years of their careers which is usually later in life. 2. […]

Market Returns Aren’t Savings

In 2013 the market and those invested in it experienced a nice return on their investments. The S&P 500 rose an amazing 29.6% while the Dow rose 26.5%. Needless to say 2013 was an amazing year for investors – but try not to make the following mistake: Don’t confuse investment returns with savings. While it is true that the more of a return an investor receives on his or her investments the less they have to save it still does not mean that your returns should take the place of systematic saving for retirement, college or the proverbial rainy day. And by no means should you reduce the amount you’re saving thinking that the returns from 2013 and other bull years will repeat and continue their upward bounty. Investment returns are the returns that an investor receives in a particular time frame. For 2013, if an investor was invested in […]

Save 1% More This year – Your Future Self Will Thank You!

    Like so many other things, practicing financial awareness has few payoffs in the early stages.  Think about exercising, eating right, putting in the extra effort at work, or taking a class to improve your skills.  All of these things have a future payoff for the extra effort that you put into it today.  Small steps matter in all of these areas, and before you know it you’ll look back and thank your earlier self for putting in the work to get where you are today. Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – and watch for more articles in the weeks to come! How Much is 1% by Sterling Raskie, @SterlingRaskie Retire Rich With Only […]

How Much is 1%?

A penny saved is a penny earned and penny-pincher are two common terms that are used to describe someone that is most likely frugal. I would admit I am one of those individuals that aspires to both phrases – and it’s not out of accident. I am one of those folks who will pick up a penny (heads or tails showing – no superstitions here) when walking down the street and put it in my pocket. That penny, nickel, or quarter (in rare cases a one-dollar bill or even higher) will usually make its way into my piggy bank or more likely one of my daughters’ porcelain pigs. I pick up the loose change for one of two reasons: It’s literally free money. To not pick it up is asinine. Little amounts add up. Think of it this way – a penny is 1% of a dollar. A dollar is 1% […]

You won’t regret it, I promise!

I often have opportunity to speak to young folks who are just starting out with their retirement accounts – this usually happens when we’re looking at ways to reduce taxes, primarily, so we start looking at IRAs and diverting income via 401(k) accounts.  One of the things I point out is that this is an activity that you aren’t likely to look back on in 20 years and say “Gee, I sure wish I hadn’t saved all that money!”  We may have many things we look back on in our lives and wish we hadn’t done them, but I think you’ll agree that saving is rarely in that category. So take the encouragement of my fellow blogging brethren and sistren (you betcha sistren’s a word, regardless of WP’s spell-checker!) and put aside at least 1% more of your income into your savings, starting right now.  You won’t regret it, I […]

Add 1% More to Your Savings

Savings rates in America are really not what they should be.  Studies have shown that, in order to achieve the goal of replacing 80% of your average pre-retirement income you should be saving at a rate around 17.5%.  This doesn’t necessarily mean that 17.5% is the right number for everyone, because pensions and Social Security can help out in replacing some of your income in retirement.  But the average savings rate for all Americans is something just south of 5% – so we can definitely do a better job.  So make the effort to apply at least 1% more to your savings rate this November.  It certainly can’t hurt! Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – […]

November is “Add 1% More to Your Savings” Month

That’s right, we unofficially declared November to be “Add 1% More to Your Savings” month.  So you can add that to the month-long observances like: No-shave November International Drum Month Sweet Potato Awareness Month and many more (see the list at Wikipedia) In November we encourage folks to increase their retirement savings rate by at least 1% more than the current rate.  It’s a small step, but it will pay off for you in the long run. Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – and watch for more articles in the weeks to come! The 1 Percent Solution by John Davis, @MentorCapitalMg Friday Financial Tidbit-What increasing your retirement contributions 1% can do for your retirement account by Jonathan White, […]

C’mon America! Increase your savings rate by 1% more!

This November we’re encouraging folks to increase their retirement savings rate by at least 1% more than the current rate.  It’s a small step, but it will pay off for you in the long run. Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – and watch for more articles in the weeks to come! THE 1% MORE BLOGGING PROJECT by Robert Flach, @rdftaxpro A Simple Strategy to Maximize Open Enrollment by Jacob Kuebler, @Jakekuebler Take a Small Step: Increase Your Savings by 1% by Jim Blankenship, @BlankenshipFP

Call All Bloggers! 2nd Annual 1% More Blogging Project

I’m sure that I’m not alone in the financial planning world with my concern about the rate of saving toward retirement across this great land.  Recent figures have shown that we Americans are not doing as this year as last, at a 4.6% rate versus 5% last year when we started this project. This is a dismal figure when you consider how most folks are coming up way short when they want to retire.  Just like last year in November, I thought maybe something could be done to encourage an increase in savings – if only by 1%, this can be a significant step for lots of folks.  November is the perfect time to do this, as most corporations are going through the annual benefit election cycle, so the 401(k) (or 403(b), 457, or other savings plan) is right at the forefront for many folks. I’m proposing that all financially-oriented […]

Take a Small Step: Increase Your Savings by 1%

As savers, we Americans are not doing a good job.  We’re improving (according to recent data), but still way behind what we should be saving.  But it doesn’t have to be that way – you can take small steps to increase your savings right away, and it doesn’t have to hurt. The Bureau of Economic Analysis recently reported that we are saving at a rate of around 4.6% of disposable personal income, an increase of 0.1% over the prior month.  On a per-person basis, that works out to about $1,831 saved per month, or just short of $22,000 per year.  Since we know that very, very few people are exactly average (by definition most people are going to be something above or below the average), what concerns me is that even those who are a bit above the average are still not saving enough.  And woe to those who are […]

Avoid the Trap

Eating and dining out all the time can drain our money and potential retirement savings without us even being aware of it. We get asked from friends to go to lunch, coffee or we find ourselves skipping breakfast and getting in the line at the coffee shop for a scone and latte. Before we know it, we’re left asking, “Where did the money go?” Or worse, “I can’t afford to save for retirement.” What’s happened is we’ve fallen into the trap – a habit really, but it can be broken and we can relearn. Here’s how: The first thing you can do is to pass on that latte or scone all together. Instead, make yourself breakfast at home. Invest in a coffee maker if you don’t have one, and make your own coffee. Then make a nice meal of scrambled eggs and whole wheat toast, a cup of cottage cheese with […]

The Crystal Ball

Every so often we get asked by our clients or prospective clients which direction the market is going to go. This is always and entertaining question to get – and some of our “regulars” already know the answer. Having a bit of a sense of humor (albeit dry sometimes) I’ll joke with clients and tell them that the day they handed out crystal balls in my investment class, it was the one time I called in sick – and you only get one chance at the coveted crystal ball. Thus, I forever lost the opportunity to predict the future of the markets. Darn. Inevitably, clients laugh and understand the joke – and take away the underlying theme of the jocularity – that we can’t predict the future, especially in securities markets. But this doesn’t mean we can’t plan ahead. So why do we invest? Why do we save for retirement? […]

A Money Back Guarantee

  You’ve heard the saying before that there are a few guarantees in life: death and taxes. I’d also like to add another: guaranteeing yourself a rate of return. I get asked this question frequently, usually by someone who’s a conservative investor or someone looking for a “sure thing”. This is what I tell them and I am telling you. Call this your money back guarantee. For the majority of readers, this will come into play as most of you have debt in some form or another. Whether it’s your mortgage, automobile, boat, credit cards, college, many Americans have different amounts of debt all at different interest rates. Typically, your consumer debt (credit cards) is going to have the highest interest rates. Here’s how to guarantee yourself a rate of return: PAY DOWN YOUR DEBT. By paying down your debt you will be guaranteeing yourself the rate of return equal […]

How Financial Advisers Get Paid

  As you begin your search for a financial professional it’s going to be important to know how the particular professional you choose will get paid. It will also be important to ask questions not only in regards to their compensation, but who actually pays the adviser.  There are generally three ways in which financial advisers and planners get paid. Commission:  An adviser that’s paid on commission generally gets paid based on the underlying product they sell. Commission rates vary depending on the product sold – anywhere from 5% to 50%. Term Life insurance for example, will have roughly a 40% commission rate on the annual premium for the first year. Whole Life insurance is generally 50% the first year. The difference being Term Life may have an annual premium of $1,000 where Whole Life may have an annual premium of $5,000. It can be difficult to be objective when an adviser can make $2,500 versus $400 […]

Why You Need an Emergency Fund

You may or may not have heard that it’s wise to have an emergency fund. Even if you’ve heard it, you may not be aware of what it means and why you should have one – and more importantly why you need one. An emergency fund is just that. It’s money set aside for a rainy day, an unexpected bump in the road, or for a real emergency or an expense that you haven’t specifically planned for. Examples of those unexpected expenses (borderline redundant – I know) include a car accident, disability, storm damage to your home, losing a job, being a victim of theft, etc. So what makes up an emergency fund? Generally, a good place to start is to have a goal of at least 3 to 6 months of non-discretionary living expenses put away in a relatively liquid account such as a savings, checking or money market […]

Why Hire a Professional?

Throughout our lives as different life events happen and the need for help arises we have the opportunity to rely on ourselves to get the tasks done, or entrust in the skill and expertise of a professional. Very often there’s a fine line as to what we’ll bother doing ourselves or to whom we’ll hire and delegate the job. For mundane tasks, the tasks that we know we can do ourselves with little to no effort, it’s second nature for us to roll up our sleeves and get the job done. Examples of this include washing the car, cleaning the house, balancing the checkbook, bandaging a small cut, and doing the dishes. It’s rare that we’ll “contract out” these tasks as they are very limited in the expertise needed to get them done, and from a frugality standpoint, most of us are willing to accept the trade-off of doing the […]

Pay Yourself First

One of the first steps to saving is to get yourself on an automatic pay plan. You’re going to learn to pay yourself first. It doesn’t matter if it’s only a minimal amount. What does matter is that you are going to pay yourself first. This concept is found in the book, The Richest Man In Babylon by George S. Classon. Consider yourself the first bill you have to pay. Here’s how you can apply this to your life: First, one of the easiest things you can do is take a portion of your paycheck and stick it right in the bank, right away, the day you get paid. One of the best ways I know of to accomplish this is through the genius of direct deposit. If your employer allows it, have your paycheck directly deposited into your bank account each and every payday. Some employers even allow a […]

C’mon America! Add 1% More to Your Retirement Savings This Year!

My fellow financial bloggers and I have come together to encourage an increase in retirement savings this year.  Since many employees are going through annual benefit elections right about now, it’s also a very good time to consider increasing your annual contributions to your retirement savings plans.  Small steps are the easiest to take, and the least painful – so why not set aside an additional 1% in your retirement plan in the coming year? The list below includes a boatload of ideas that you can use to help you with this increase to savings.  I’ve heard from several more bloggers who are going to put their posts up soon. If you’re a blogger, see the original post for details on how to join the action: Calling All Bloggers! Listed below are the articles in our movement so far (newest are at the top): From Dana Anspach: Can You Spare […]

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