NURSING
HOME SITE
- ADULT RETIREMENT COMMUNITIES SITE
Ten
Steps to Save Your Retirement
by Lawrence Groves
Many
of the brightest and hardest-working marketing and advertising people
in the country are obsessed with getting you to spend money and,
if necessary, to go into debt to do so. Absolutely all the media
that reach you every day are designed to get you to spend money.
In order to save money in this environment, you will need determination
to withstand the constant pressures to spend now.
What
is it that separates those who are successful from those who are
not?
Successful
individuals have a strong personal vision of what they want and
why they want it. That vision gives them the strength to stick to
their strategies even when doing so is uncomfortable. It gives them
the determination to persist when they are discouraged. This is
the same characteristic of women entrepreneurs that makes their
new, small businesses successful.
The
401k Plan
Today, the 401(k) plan has become the main investment vehicle for
working women to save for retirement. But many don't take full advantage
of their plan, and this could leave them with a lot less at retirement.
Here are some steps we believe you can take to improve and eliminate
any retirement worries about whether or not your retirement will
be pleasurable or subject to public charity, Or whether you will
have any time to spend with your family or friends
1. Increase your contributions to the maximum that you can manage.
Many workers contribute just enough to take advantage of their employer's
matching contributions, and then they stop. By adding more to your
account, beyond the matching contributions, you'll end up with more
in retirement.
2. Invest at the start of each year instead of taking a little bit
out of each paycheck. Nothing in the law says you have to invest
in a 401(k) plan a little at a time, from each paycheck. By investing
early, you'll put your money to work sooner for your benefit.
3. A few years ago it was reported that more than 30 percent of
the money in 401(k) plans was invested in money-market funds or
similar accounts. For investors nearing retirement, that may be
appropriate. But most workers in their 40's and 50's need growth
in their retirement investments. Put more of your investment fund
in equities and less in money-market funds.
4. Research indicates that over long periods of time, small-company
stocks outperform large-company stocks. Since 1926, In the equity
part of your portfolio, shift some of your money into funds that
invest in small companies. Don't put your entire equity portfolio
in small-company stocks. But consider investing at least 25 percent
of your U.S. equity investments in that fund.
5.
Numerous studies have shown that value stocks outperform growth
stocks. According to data going back to 1964, large U.S. value companies
had a compound rate of return of 15.1 percent vs. only 11.4 percent
for large U.S. growth companies. Among small U.S. companies, the
difference was even more striking: a compound return of 17.4 percent
for the value stocks vs. 12.1 percent for the growth stocks. Don't
put your entire equity portfolio into value stocks. But if there's
a value fund available to you, consider investing at least 25 percent
of your U.S. equity investments in that fund.
6. Rebalance your portfolio once a year. Your asset allocation plan
calls for a certain percentage to be invested in each of several
kinds of assets. Rebalancing restores your asset balance and allows
for the possibility that last year's losers may be this year's gainers.
Diluting your diversification actually increases risk in your portfolio
over time, which is a result that's just the opposite of what most
investors want.
7.Without compromising proper asset allocation -the most important
set of investment choices you make - use the funds in your plan
that have the lowest operating expenses. Choose funds with low turnover
in their portfolios.
8. Don't borrow or make early withdrawals from your 401(k) unless
that is the only way to respond to a life-threatening emergency..
Furthermore, if you take an early withdrawal before you are 59.5
years old, your withdrawals will be subject to a 10 percent tax
penalty (in addition to regular taxes) unless you are disabled This
is a simple issue. Just don't do it.
9. If you leave your job, you'll get a chance to roll over your
401(k) into an IRA. Take that chance. In an IRA, you have the same
tax deferral as a 401(k), and you'll have the flexibility to invest
in virtually everything you can get in a 401(k), plus much more.
10. Here's the most important thing you can do to maximize your
401(k): Keep your contributions payroll deducted automatically,
and make them no matter what. It's simple, but it's not easy. Half
of the households in the United States have net worth of $20,000
or less.. In a typical year, about two-thirds of U.S. households
do not save money.
Remember, to be successful, first, imagine your early retirement;
the Caribbean condo, the yacht, the new Lexus. Luxury and pleasure
as far as your eyes can see. Create a strong vision, and then don't
let go. The power of a clear, strong vision applies to more than
just your retirement savings. Let your vision shape your life, instead
of the other way around, and all of the time in the world can be
yours.
About
the Author
Lawrence Groves is the Director of Small Business Retirement Administrative
Services for the Retirement Group.
A nationally recognized author and retirement plan expert with over
25 years in plan design, administration, and compliance experience.
Lawrence works with small business retirement plans through the
www.solo-k.com,
the www.womensolok.com,
and the www.seniorsolok.com
sites.
You can reach at Lawrence@solo-k.com or (727) 277-4137
