Retirement!
Can It Be More Exciting Than It Sounds?

Start investing as soon as possible in your company’s 401K or an IRA. You’ll need it. Thank you and good-night. See you in Miami in about 2o years. I'll be wearing white patent leather shoes and a blue captain's hat. Feel free to join me for the early-bird special dinner.

I do hope you’ll read this whole page for two reasons. The first being I took the time to write it. The second is, although retirement is years away for some of us and a lot closer for others; preparing for it is one of the most important things you’ll ever do for yourself.

Many Americans are not adequately prepared to financially retire. And yes, even I resembled that remark before I researched this several years ago. 40% of all Americans say they have no savings or retirement plan. More than 2/3 of U.S. workers have less than $50,000 saved for their golden years. The average credit card debt for one person is $9,000. Ouch. What do we do?

Without trying to sound like Suze Orman, we have to pay down our debt and increase our savings. It’s that basic. The hard part is finding areas to cut back.

Experts say you’ll need about 85% of your pre-retirement income to sustain a life of leisure. Your retirement can last 30 – 40 years and unexpected emergencies can arise. You source of income will come from four places:

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• Savings- As I said earlier, Americans have one of the worst savings rate in the free world. It’s even approaching a negative value. Obviously you can only save what you take in. The world famous clasic book The Richest Man In Babylon says to put away 10% of your income into savings each month.

• Pensions- Remember the good old days when companys paid money into an employee’s pension? I don’t. It’s up to us now. You are responsible for taking money from your own paycheck and depositing it into a 401K. Kiss it goodbye till you retire. But you’ll be glad you did.

• Social Security The Social Security administration said to expect benefits to be significantly cut by 2040. Does it matter? It’s not like you can buy the BWMer with the payments you’d receive now.

• Continue Working For some people it might be possible. Maybe your employer can keep you on part-time. Maybe its time for a new career. You may have to continue working.

Now that I’ve painted this wonderful image of our later years, let’s look at the bright side. There are ways to retire a millionaire. If you’re rich, skip the rest of this page. If you’re not, keep reading. You will be rich.

401K: From your paycheck try to put at least 10% into your company’s 401K. If your emloyer adds a matching percent to your 401K, that's sweet.

The contributions you make reduce your taxable salary. No state or federal taxes are paid on money deposited into a 401K. By starting as early in your career as possible you can become a millionaire by the time you retire or before. If you’re starting late, try to contribute as much as you can.

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You can borrow up to half the value of your 401K, with a maximum of $50,000. The interest you pay on this loan is paid into your account. About 30% of 401K participants borrow from their account.

IRA: Roth IRA or traditional? Roth IRA’s allow tax-free withdrawals because you were taxed on the contributions. You can’t take these contributions as a deduction. The seemingly short-term negatives will pay off in the long term. Roth IRA’s are better for individuals who expect to be in a higher tax bracket when they retire. The reason being, you won’t pay tax when you take the money out.

Traditional IRA's allow you to make contributions tax-free. When you turn 59 1/2 you will pay taxes on your withdrawl.

Either way, if you don’t have a 401K at work, consult a financial advisor on the best path to take. As an alternative may I suggest a dose of Suze Orman.

And yes, I'm serious.

What are some saving guidlines? If Suze Orman makes you feel guilty about that Porsche 911 you bought, read David Bach's Automatic Millionaire.

It's a quick read and you'll feel you actually can "finish rich."

Into hard core calculators? Check out this site for the best selection of financial planning tools.

www.DinkyTown.com - Financial Planning Calculators

Fun Facts If you put away $286 every month at age 25 and earn 8% on your money, you’ll have $1 million by age 65.

If you put away $1,698 every month at age 45 and earn 8% on your money, you’ll have $1 million in by age 65.

Both scenarios assume you had 0 dollars in savings. So you might be doing better than you think.

I am not a financial planner nor do I play one on TV. The point of this article was to give brief introduction to a topic I’ve avoided myself. If you don’t plan to “live fast, die young & be free”, put money away now.

You’ll never have to worry about it later.

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