Tags: Retirement | income | save | spending

USA Today: Maximize Savings, Cut Spending for a Secure Retirement

By    |   Thursday, 05 March 2015 07:40 AM

Surveys show that approximately one-third of unretired Americans have no retirement savings, including about 20 percent of households aged 55 to 64. Clearly we have a problem on our hands.

So what can we do to attain a secure retirement? USA Today cites several important steps to take.
  • Maximize savings. Financial planner Michael Dalton tells the paper you should save 10 to 13 percent of your gross income for retirement. If you're saving in a 401(k) plan, there's a good chance your employer will match at least some of your contributions.
  • Cut spending. There's almost always some luxury you can drop from your budget—restaurants and premium TV packages, for example.
  • Invest smartly. That's how you capitalize on your savings to grow your wealth. You can consult with a financial adviser or use an online service to determine an asset allocation strategy.
  • Look at your housing options. If you're living in a large home, you may want to downsize. That can generate tremendous savings. You'll probably spend more time in your home during retirement, so make sure it's one you like.
Meanwhile, John Bogle, the esteemed founder of Vanguard Group, takes a slightly different tack on the issue of increasing savings than many retirement experts.

"Everybody's big focus is that we have to save more," he tells The New York Times. "A greater part of the problem is the failure of investors to earn their fair share of market returns."

The fees we pay for our retirement investments eat heavily into our returns. Bogle has repeatedly harped on the high expense of actively managed mutual funds, which account for most of the choices in 401(k) plans, compared to index funds.

David Swensen, the legendary manager of Yale University's endowment, puts the issue bluntly. "Wall Street makes no money on low-cost index funds," he tells The Times. "That is the problem."

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Surveys show that approximately one-third of unretired Americans have no retirement savings, including about 20 percent of households aged 55 to 64. Clearly we have a problem on our hands.
Retirement, income, save, spending
310
2015-40-05
Thursday, 05 March 2015 07:40 AM
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