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Online retirement calculators
Online retirement calculators can help workers determine how much they'll need to save for retirement. For a list of online retirement calculators, go to www.choosetosave.org/calculators.
Catch up on savings
With inflation, health-care and gasoline costs, most Americans are facing a shortage in retirement savings. But according to about.com, it's not too late to make some preparations, even for those who are on the other side of 40 and don't yet have substantial savings. Here's some advice:
Estimate roughly how much money you'll need to live. A ballpark figure is a good starting place, and you can use one of a number of good online retirement calculators to get an estimate.
Calculate what will be available from sources other than your savings. What is your expected Social Security benefit at retirement age? Do you or your spouse have a pension from a previous or current employer? If you have a 401(k) plan, what is its expected value at your planned retirement age? Use a conservative rate of growth to avoid overestimating.
Set goals for reaching the amount you'll need to make up the difference between Social Security, pensions, and any other retirement funds you already have.
Sign up. If your employer has a 401(k), 403(b) or other voluntary contribution retirement plan, and you're not already participating, sign up today and try to contribute the maximum allowed by law. If your employer matches a percentage of your contribution, that's free money you should never pass up.
Go for the Roth. If you make under the income thresholds, you can contribute to a Roth IRA in addition to your 401(k) or 403(b) plan. The contribution is not tax deductible, but the earnings will be tax-free in retirement.
Consider relocating or downsizing. If you live in an area with a high cost of living, moving to a less expensive area and investing your savings for retirement could make a difference in savings. If your kids have left home and you're still living in a big house that has appreciated in value, consider selling it and buying a smaller, less expensive home. You'll save not only on your mortgage payment, but in less obvious places like the cost of heating, cooling, insuring, and repairing your home, property taxes, etc.
Consider taking on a second job, and invest your earnings.
Play catchup. The tax laws now allow those over 50 to contribute a little extra to 401(k)-type retirement plans and IRAs, so they can do a little catching up as they near retirement age. Take advantage of this if you're over 50.
Get out of debt. If you carry thousands of dollars of credit card balances and pay the minimum payments each month, your potential retirement savings is going directly to your credit card company in the form of interest. Start applying as much as possible to your credit card balances and once they're paid off, resolve to pay the balance in full each month.
Source: http://financialplan.about.com/od/retirementplanning/
