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Ten Steps to Save Your Retirement
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
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