|
Personal Wealth: Are You Building Enough Wealth to Support Yourself in Retirement?
By Elaine L. Chao For NewsUSA
The 21st century offers new opportunities and compelling reasons for workers to achieve the American dream of financial independence in retirement. Fortunately, making that dream a reality got easier when President George W. Bush signed the Pension Protection Act of 2006 into law. This has enhanced the ability of millions of Americans to build wealth through retirement savings programs.
Americans today generally are saving less, spending more and living longer than previous generations. A longer life span means the need for increased savings. And the sooner workers start saving, the better. In financial planning, time is your best friend.
A $125-a-month investment at a modest 5 percent annual return adds up to $50,000 in 20 years, more than $100,000 in 30 years and nearly $200,000 in 40 years. The sooner you start putting money aside for your future, the longer that money can work for you.
If you see a dime on the sidewalk, you most likely will reach down and pick it up. Yet, many workers are leaving thousands of dollars on the table by not signing up for tax-deferred savings programs offered by their employers, especially when those employers provide matching funds. The problem is that some workers are unsure how to invest.
The Pension Protection Act helps solve this problem by making it easier for 401(k)-type plans to enroll workers automatically. Workers can always "opt out," but they won't "lose out" by not making a decision. Rules proposed by the Department of Labor boost retirement savings for these workers by creating appropriate default investments for long-term retirement savings.
Here are a few strategies to help you start taking charge of your retirement future:
* Participate in your employer's retirement plan at work, and be sure to take advantage of matching contributions.
* Increase the amount you contribute to your 401(k) or other retirement plan each year.
* If you're 50 or older, make additional contributions of up to $5,000 to catch up for years in which you did not put money into the plan.
* Be realistic about expenses in retirement to ensure that you do not outlive your savings. Be sure to account for healthcare costs such as prescription drugs.
Secretary of Labor Elaine L. Chao also serves as Chairman of the Board of Directors of the Pension Benefit Guaranty Corporation. For more information, go to www.dol.gov/EBSA.
More Articles
International Investing: Why it Makes Sense
Of the world's 40,000 publicly traded companies, 77 percent are located abroad, a pretty good sign that there are compelling investment opportunities outside the United States. Viewed another way, 51 percent of the world's $38 trillion total market capitalization belongs to the international arena. U.S. mutual funds hold $491 billion in overseas investments.
Gold: A True Barometer Of Public Confidence
Gold and silver coins, the famous "old world" currency, are fast becoming the "new world" currency because they offer the missing link in all paper currencies: a store of value.
When Going Gets Tough, Look To Dividend-Paying Stocks
Dividend-paying stocks may provide investors with solid results and, quite possibly, a smoother ride along the way. An expanding dividend supply is presenting itself when investors need it most: a volatile market and a volatile world.
What's Really Driving Your Portfolio Performance?
According to Roger Ibbotson, chairman and founder of Ibbotson Associates and a professor in the practice of finance at the Yale School of Management, what really drives performance over the long term is asset allocation - the assignment of money to different categories of assets, such as large- and small-cap funds, international funds, bonds and cash.
Take the Guesswork Out of Asset Allocation
Talk to any financial adviser and the mantra these days is diversify, diversify, diversify. But to average investors, that's not so simple. What exactly does that mean and how do they go about doing it?
Incorporating Bond Funds Into Your Investment Strategy
Bond funds can offer investors many of the same benefits of individual bonds, in addition to the advantages of diversification and professional management, according to "Bond Funds: The T. Rowe Price Investment Guide."
'Human Capital' Key Part Of Investment Portfolio
Age doesn't single-handedly dictate an investor's stock-bond blend. Instead, an investor's current savings versus future potential savings should set the mix, according to financial experts.
The Right Choices Can Reduce Investment Taxes
Given fluctuations in the market and changing tax law, there's nothing certain about the amount of taxes individuals will pay annually on their investments, but there are some choices investors can make to reduce their tax bill.
New Data Shows How Investors Fare
Investors often choose funds based on their past performance, buying too late and selling too soon. As a result, they lose money by investing in highly advertised hot funds or fleetingly popular sector funds.
"Investors know they should hold diversified portfolios, but many chase past performance," said Don Phillips, managing director of Morningstar.
Childhood Investments Can Build Nest Egg for Later in Life
"Investing early in life is important - not only does it give young investors a head start in building a nest egg for a first home, a college education or retirement, but it also creates good investing habits," said David Kathman, fund analyst for investment research firm Morningstar Inc.
Wall Street: the Road Block To Your Investing Success
Investors today face a barrage of conflicting information and exaggerated return claims from what most people consider the "market" -; the S&P 500 or the Dow Jones Industrial Average. But these indexes only comprise about 12 percent of all U.S. stocks. The reality is that these stocks can't be predicted with any consistency, especially long-term.
In the complicated world of financial services, you're being misled.
What a Company's Stewardship Means for Your Investment
What really distinguishes good corporate governance from bad? Does it really matter to the individual investor what a management team does as long as the stock price goes up and dividends get paid?
Is an Exchange-Traded Fund Right for Your Portfolio?
Exchange-traded funds (ETFs) have been around for years, but new offerings have increased their profile even more.
ETFs have several clear advantages over traditional funds: lower annual expense ratios, greater tax efficiency and flexible trading. Nevertheless, they aren't suitable for everyone.
Private Company Index Compares Main Street to Wall Street
Founded by Entrex Inc. in mid 2005, the Private Company Index, also called PCI, is the only indicator tool of its kind that measures trends in the performance of North American private business on a monthly basis.
Morningstar Firm Helps Identify Economic 'Moats'
Independent investment research firm Morningstar Inc.'s "fat-pitch" investment philosophy - find great companies that boast competitive advantages and buy them at a discount to fair value - is simple to understand, but difficult to employ. Outstanding businesses rarely come cheap.
Tips on Finding a Qualified Financial Adviser
Retirement planning. Long-term care insurance. College savings. These complex financial topics can be downright baffling.
As their financial needs change, many people find it a good idea to consult a qualified professional to help them navigate the nuances of financial planning.
Are You Building Enough Wealth to Support Yourself in Retirement?
Americans today generally are saving less, spending more and living longer than previous generations. A longer life span means the need for increased savings. And the sooner workers start saving, the better. In financial planning, time is your best friend.
Make Real Estate Investment a Snap
History has shown that the best time to be an investor is in a buyer's market not a seller's. And while across America housing sales have continued to slump, foreclosures are at an all-time high -; meaning that for serious investors, the time to focus their energies on buying real estate is now.
Despite Cool Market, Investing in Real Estate May Be Worthwhile
The real estate market has cooled off a little bit, but the boom hasn't exactly come to a halt. If purchased properly, some say real estate is one of the safer investments in our nation. The population will likely continue to increase, and people need shelter - whether it's for their home or their business.
Personal Wealth: Give to Receive - Five Tax Tips
According to Jim Tyrpak, CLU, ChFC, AEP, MSFS, president of the Society of Financial Service Professionals, there are more than a few ways being charitable can benefit you as much as the gift receiver.
Education: The Ins and Outs of 529 College Savings Plans
Saving for college is an important part of many families' financial picture. Families may choose to explore state-run 529 plans, which allow investors seeking tax-free growth of assets to pay for higher education.
Education: Leveling the Playing Field Among 529 College Savings Plans
Many people are already aware of the benefits of investing in a state-sponsored 529 college savings program. What might not be as well known yet are tax parity laws.
Education: Personal Finance 101 Saving Money Before and During College
According to the College Board, the average yearly cost for a public college is $5,836, and the cost for a private college is more than $22,000. So when you're planning your educational future, it's a good idea to create a clear financial plan before you ever set foot on campus.
Education: Budget-Wise Tips for Managing College Costs
The average college student spends nearly $3,000 for various expenses beyond tuition, according to the College Board.
Good financial habits learned early will serve the student throughout his or her college years and well beyond, says Rich Linsday, president of the Society of Financial Service Professionals.
| 