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How can I Retire?

One of the biggest questions we face is “How can I retire?” In today’s financial situation. We spend our retirement without even think about it. Living for today or trying just to survive will catch up to you in the end. Planning ahead is the key. Something we really don’t do, especially when we’re young. Who thinks about getting old? That answer is elderly people that now have to face retirement based on Social Security only. Just imagine trying to enjoy your retirement on $1200 a month. Can you do it?

I love the TV commercial when a guy asked for what you have in your pocket today and can you retire on it. This is very possible to complete when you’re young. Notice the commercial has young people in it. You don’t see a 50 year right down the money in his pocket. Because this plan will not work for him. They don’t have the time left to grow a small amount into a retirement. They must speed the process up.

retirement stressIf you haven’t planned for your retirement, don’t stress out yet. 1 out of 3 Americans hasn’t saved anything. 1 out of 5 Americans plans on working till they die. Common sense says the older you are, the least amount of time you have to prepare. Most people do not understand this until they lost 20 years of prime retirement savings time. This is when reality smacks you right in the face. The moment use realized you lost thousands of dollars to retire on and time is running out.


Why I can’t Retire?

One of the best excuses I hear is life gets in the way of retirement. I barely have enough to cover my monthly budget. My job doesn’t offer a retirement plan. I don’t understand how investing works.

The fear of growing old is compounded by today’s society. The pressure to succeed in life is advertised all around us. Everybody loves the new car, take nice vacations and own the latest greatest invention. We spend our hard earned money trying to keep up with our neighbors, friends, and The Jones’. All this extra spending can hurt you when it comes time to retire. Getting control of your own life is the key.  

Wasting Money

My father taught me about wasting money on new items. Why buy a new car when you can get a used car, a year and model from the previous year, for thousands less? The amount saved can help you retire someday. As a young buck, this advice didn’t mean anything to me. When I hit my 40s, I was kicking myself for all the money I wasted trying to be young and cool.

going down the drainCarrying credit card debt is robbing you from your retirement. Using your credit card to cover monthly expenses, then paying the card off in full monthly, is actually what you want to do. Carrying the balance over to the next month waste money. Every month we carry a balance, we lose the interest to the bank and negate our savings.

Trying to manage life without a budget is wasting your money. How can you plan to do anything without knowing where your money goes? Every penny adds up. Especially when you can invest $100 a month. After 20 years with a modest gain of 6%, you would have $46,791.27 for retirement. Finding this extra money lies in your budget. Budgeting is a must.

If you’re not using a monthly budget, please go to Own Your Life – Financial Goals and start there. Follow the Own your Life series to create and maintain a monthly budget.

The Cost of Retiring

Unless you started saving for retirement in your 20’s, chances are your income will be less when you retire. This is where you really need to prepare ahead for this important date. Since you can’t spend more than you make, you must complete a workable budget with your new income. You may need to cut back on expenses and lifestyle to make your income fit.

Many of us assume that our spending will decline in retirement. No more daily commuting costs or having to maintain a work wardrobe. Fewer pricey business lunches. An end to withholding for 401(k) plans, Medicare and Social Security. One common rule of thumb suggests people plan on needing about 70-80% of their pre-retirement income to pay the bills.

PF-retirement_1666571cMany retirees do find that their expenses go down, sometimes even below that 70-80% estimate. But others are surprised to see them heading in the opposite direction. Travel is one big reason. Uncovered medical expenses are another. Ditto for unexpected tax bills. Still another cause: Retirees simply have more free time to spend, spend, and spend.

The cost of health care is not completely covered by Medicare. While Part A of traditional Medicare, which covers hospital benefits, is free, you’ll pay a premium for Part B to get coverage for outpatient services and a premium for Part D to get prescription-drug coverage. Add in the premium for a private Medigap policy, which helps cover the costs that Medicare doesn’t cover, and a couple can end up paying $6,500 a year in Medicare premiums alone. That’s an extra $541.00 per month to your budget. Are you prepared?

Talk to a Financial Planner

When it comes to figuring out a retirement plan, I cannot stress enough to seek out a financial planner. For this article, I sat down with Todd Ille of Edward Jones to find answers to help people retire. The education alone was priceless. If you have any questions, please contact Todd at 859-342-4512, email:

edward jonesI asked Todd “What is the best way to retire.” His answer was “How much do you think you will need to retire?” This is a great question and everybody’s amount is different. I thought about it. I believe I will need an extra $500,000 for retirement. The next step is how to save this amount at 48 years old. The answer is to invest $1000.00 per month for 20 years. How can I do this and keep up with today’s lifestyle? The clear answer is I can’t. I must change my lifestyle to prepare for my retirement.

Always take full advantage of Employers 401K plans. Have the maxed pulled from your paycheck and never, ever spend it.

If your employer doesn’t offer a 401k PLAN, set up an Individual Retirement Account (IRA), budget you’re saving to help maximize your saving potential and never spend this money. The max you can put into (IRA) account is $5500.00 a year. You can double that figure if you’re married.  You can also set up a Health Savings account (HSA). The max you can put into a HSA is $3250.00 per year. Double the amount if married. As long as you use the funds for qualified health care expense, you will not pay taxes on the withdraws. I recommend having both plans are part of your portfolio.

Once you have maximized the plans, it’s time to invest more income into a diversified portfolio. Please see a financial adviser for specific strategies based on your circumstances. Together you will build a plan that works within your budget and make life much easier and less stressful.

Your retirement is protected from everything you can possibly do wrong in life. Retirement can’t be garnished or liquidated due to debt. It’s even protected from bankruptcy. This is why you never withdraw or borrow from your retirement. Borrowing from your retirement is borrow from yourself but with a tax hit and loss of future growth. So never, ever reduce your retirement egg for any reason or circumstance you may face. You just don’t have time to recover.

How can I Prepare for Retirement at age 50?

Getting serious about retirement planning at age 50 isn’t optimal, but it certainly beats the alternative: facing retirement with no plan at all. It will take some due diligence and willpower, but sticking to a plan for the next 15 to 20 years will put you firmly on the path to retirement security.

struggling to retireFor starters, you need to get out of debt. At this stage in life, you should only owe on your home and maybe your auto. Hopefully, both are close to being paid off. All other debt must be paid off to make the extra room to retire. This is a vital step since your income will probably drop and make it very hard to cover your monthly obligations and debt. Get rid of the debt.

Maintain and work your monthly budget. Look into cutting your expenses down to a minimum. This will also free up money to invest. Changing your utilities to even billing, dropping services you barely use and plan out your grocery spending a week in advance. Having a plan always saves money.

Pay yourself first. This old tactic seems to be tougher today than ever. But it really isn’t. If your employer doesn’t offer a retirement plan, you need to create one on your own. Take full advantage of an IRA and HSA plan. Set up an auto-deduct to your bank. This way you don’t see the money. Out of sight, out of mind.

After you max out those plans, let a financial planner diversify your portfolio. On average, a financial planner cost you about 1.5% of your investment. Well worth the cost having an expert manage your portfolio.  Besides, you don’t have time for risk.

How can I Prepare for Retirement before age 50?

Having an extra 10 years to save for retirement can double your retirement. Investing the same $100.00 per month for 30 years will give you $110,387.08 to retire on. After 40 years will see the amount grow to $224,457.59. Time and discipline is the key. The earlier you get started, the more you will generate for retirement.

Now just imagine if you can afford more than $100.00 per month. You can and it lies within your budget. Review all your monthly expenses and debt. Find items to cut back on. Start reducing your debt as fast as possible. As your debt is paid in full, add your payment to your investment. 

logoYou need to create a plan with a budget and learn stick to it.

A Debt Coach credit counseling services offers free budgeting and credit courses twice a month. To register for our next course, please call 888-767-9155 today. Learn how to get control of your life, maximize your potential and create a plan for success. 


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