Last But Not Least

Retirement planning - it has completely slipped from your mind in the past 3 or 4 decades, what with college loans, home mortgages and car payments, you hardly ever have enough to survive, let alone to think about saving for retirement.....

Are you a late starter? In saving for retirement?

"How late is late?" You ask.

Well, if you're now 50 or 60, you're late - but not too late yet......

So, don't get panic like some folks who cash out their IRAs and spend the money on holidays, cars and expensive parties.....thinking they would never save enough for retirement, they decided it didn't matter if they saved anything.

Some of them have meagre savings, and don't see how they'll ever have any more. So they plan to work until they "drop dead" or until their health stop them form doing so, and then live whatever lifestyle Social Security and Medicare can provide them....

Don't be like them, and stop panicking. You still can save and head for comfortable golden years.

I've 4 tips here to help you get on your way to a secured retirement.

1. Decide How Much You need Per Month In Retirement

Tough?

Not really.

Get down to your major expenses which will be housing and medical care. Add in your daily living expenses like food, transportation and household bills. These are your necessities which you want to have, no matter what.

Then you've your so-called "optional expenses" that could add or minus quality to or from your retirement life - travel/vacation, hobbies, dining & wining, entertainment.....

An easy way to nail down all your expenses is to go through your checkbook and credit card receipts and see how much you currently spend in each category: housing, medical, household bills, transportation, food, clothing, vacation.....

If you don't have proper records, keep close track of every expense for 2 or 3 months. Then you can decide how much of each of these amounts is relevant in your retirement.

(Note: For medical care, for most retirees, Medicare covers 80% of medical expenses. To be on the safe side though, you may want to budget an extra of say $500 per month for medical expenses)

2. Sort Out Your Income Sources

Add up the after-tax monthly income that you expect in retirement.

You pay lower taxes during retirement as there're no Social Security taxes withheld from retirement income. Some income is capital gains and some benefits are tax-free. Of course, Social Security will also fund some parts of your expenses.

Say you're over 50 years old with no savings, very likely you'll retire after age 65, when you can receive full Social Security benefits.

(Note: If you aren't sure of the amount of Social Security you'll receive, you can get a benefit estimate from the federal government)

For example, if you currently makes $52,000 a year and has take-home pay of $40,000 and $6,000 in IRAs and you enjoy your current lifestyle and your only goal in retirement is to be able to afford your current lifestyle.

You'll not retire at age 65 and are happy to stay on till age 72 unless you're forced out earlier or health prevents you from continuing. If you were to retire today and receive maximum Social Security payments of $15,000 a year, you would need enough savings to fund $25,000 a year in expenses at today's dollars. To get there, you must increase savings and achieve the highest possible return on your investments.

3. Increase Your Savings

A late starter like you can increase savings in 3 ways:

• Reduce your expenses

Don't go into the habit of spending your retirement savings on excuses of emergencies, unexpected shortfalls or tight cash...Preserve and don't touch your savings or else you won't have a chance of increasing your savings.

Start a cash reserve fund, by setting aside enough money to cover 3 months'worth of expenses for emergencies.

How do you do this?

Cut down expenses at your current income. The best way is to have a plan to keep income out of your hands and out of your checking account.

Automatic withdrawals from your paycheck into savings accounts and tax-deferred retirement accounts like 401k plans are safe-proof ways you won't get to touch your money.

(Note: In addition, tax-deferred retirement accounts reduce your taxes so you can save more. Many plans also include employer matches, which can double your contributions without increasing your taxable income)

• Increase your income

Say you switch job and your new employer has a good pension plan. You can negotiate for the same take-home pay with an increase in income going to your retirement.

Or if you can get a pay raise from your current employer, you can divert the raise portion directly to an IRA or savings account.

To get more income, you may have to sacrifice a bit like may be consider to move to other parts of the country or even overseas to work. Opportunities for bigger income may be in these places and therefore a chance for you to amass enough savings to return home to live the life you want.

Is it easy to do both - reduce expense and increase income?

Quite a daunting task because both cause disruptions in your life and you could suffer from some emotional consequences. But if you set your heart to do them, it's do-able.

• Convert your current assets into investments

Your home equity is the most common asset that you can convert into investments. Besides, you can also convert jewelry and collectibles of all kinds and antiques into productive investments.

Sieze the opportunity to sell high and buy low by moving from a booming neighborhood to a still-cheap retirement neighborhood and invest the excess amount.

Don't consider taking out a second mortgage on your house - it only stresses up your financial position by increasing your expenses and you could be losing your house if either the investment market or the housing market crashes.

4. Invest, Invest, Invest

Once you get your savings plan in place, invest for the highest possible return appropriate for your time horizon.

But also remember that the highest return asset classes are also the most volatile; if you want those high returns, you must be able to weather through the down years.

For example, some overseas stocks have high returns (e.g. Hong Kong stocks have produced outstanding returns over the past 50 years).

Yet there have been times when prices dropped by 30% and more. If your retirement date is 3 years away, you can't risk losing 30%.

If you've 15 years until retirement, these stocks may be a good choice as the up years can be expected to far outperform the down years.

To maximize your investments, consider these assets according to your time frame:

5 Years or Less

The best investments are medium-term Treasury bonds and other government-guaranteed, fixed-income securities, as well as high-yielding real estate investment trusts, and high-yielding utility stocks.

5 to 10 Years

Consider large-cap U.S. stocks, real estate and corporate bonds of BBB grade or higher.

More than 10 Years

Small cap U.S. stocks, foreign and emerging market stocks, sector funds, and highly-leveraged real estate.

When investing for retirement, you need to invest not just from now until your retirement date, but from now until the end of your life.

So you who are late in planning retirement, do catch-up now by using the guidelines above. You'll be able to secure a good retirement savings to live the lifestyle you want in retirement.

Today, only 42% of Americans have calculated how much they need to save for retirement. By planning your retirement now, you get to calculate how much you need to save. Cecelia Yap shows you one excellent way to retirement planning here:

http://www.perfect-body-toning.com/my-passion.html

Dear Abby - DEAR ABBY: I work in a medical office and would like your help in asking patients when entering the clinic to please respect the privacy of the people ahead of them and not peer over their shoulders when they sign in. It is not only rude, but also a violation of HIPAA privacy laws.