last blog, I mentioned the sad state of affairs for many of those in their 60s who are on the verge of retirement, or at least who would like to retire soon. The Wall Street Journal's recent article, “Retiring Boomers Find 401(k) Plans Fall Short” (link no longer available) reiterates the case. According to a study cited in the article, the median household headed by a person aged 60 to 62 is ill-prepared for retirement.
No doubt times are tough. Even the most avid savers and frugal spenders can get off track due to unemployment, medical bills and unexpected occurrences. There are some economic circumstances that cannot be controlled, but there are many that can. For instance, consider your saving and spending habits:
- If you are receiving a tax refund this year, what are you doing with it? Paying down high-interest debt? Saving it into a retirement account? Or spending it on a “want” item as opposed to a “need” item?
- Check your 401(k) or IRA. Are you making the maximum contributions allowed? If not, ar
e you contributing at least enough for a full company match (if your company provides a match)? Are you taking advantage of all tax-deferred or Roth retirement plan opportunities available to you?
- Are you looking at ways to cut expenses? The gym membership that is never used, the pay-movie channels never watched, and the storage space rental all add up.
- Do an insurance check-up. Are you over-insured? Yes, there is such a thing. Can you drop the collision insurance on a 10-year old car? Are you taking advantage of homeowners' insurance and car insurance discounts for having a burglar alarm, being a safe driver, etc.?
When it comes to monthly expenses, most of us are on auto pilot. We pay the bill when it comes in without a second thought, or in some cases, never go through the physicial action of paying a bill because it is debited from a bank account. But monthly expenses add up and a year's worth can mean the difference between saving an extra $1,000 or more each year or wondering where it all went.