Five Quick Tips to Boost Retirement Savings

Retirement is inevitable. At some point, you will not be able to work. Robert Teitelman wrote about the scary prospects for retirees in The Looming Retirement Crisis and What to Do About It in The Huffington Post. He reiterated the devastating statistic that "75 percent of Americans nearing retirement age had less than $30,000 in their retirement accounts". The ballpark "number" needed in our grasp at retirement was quoted as 20 times our annual salary. So, if you're earning $100 thousand per year you need $2 million at retirement. Cut that in half and assume a $50 thousand per year earner only needs $1 million at retirement. That $1 million bucks is a far cry from $30,000. Forty and fifty year olds compare these numbers with their tiny retirement accounts, and it's not unusual to give up trying when one or two million seems like an impossible dream. Douglas Carey, a Benzinga Contributor, wrote Saving More Vs. Seeking Higher Returns for Retirement, an optimistic piece illustrating how a few small tweaks in your savings and yields can result in huge increases in retirement funds. I'm a huge proponent of how to invest and get rich (slowly) yet I also understand the frustration with the equity markets. These past ten years have put a damper on investor's returns and created a generation of doubters. Although it is impossible to predict the future, if you believe the USA and world economies will continue to grow, then the equity markets offer a way to participate in that growth. Although many advisors recommend high dividend payers, I recommend several index funds representing a diversified portfolio of international equities as well as diversified, low cost government and corporate bonds. If the aggregate companies are growing, the investor will prosper whether there is a hefty dividend or not. Assume you are 40 years old and save $500 per month (save the cash by skipping the car payment and buy a used model instead). If your employer kicks in another $300 per month, assuming an annual return of 7 percent, you'll have amassed almost one million bucks by age 70. 5 Investment Tips to Boost Your Retirement Savings

• Increase your retirement saving. Visit your human resources department and direct them to deposit a set amount each month into a retirement account. Invest these funds in a mix of diversified index mutual funds such as, Vanguard US Stock Market Index Fund (VTSMX), Vanguard Total International Stock Index Fund (VGTSX), and Vanguard Total Bond Market Index Fund (VBMFX). Make sure to contribute enough to get the employer match.
• Cut back on spending. Forget about keeping up with your neighbors. Sell the luxury car and buy a used model. Take a staycation for a year or two and save the difference. Enlist the family and discuss ways to save.
• Earn more. Take on consulting assignments or a part time job. Think of it as a time limited activity which will boost your lifetime wealth, not as a penance. Save and invest the earnings. Believe you can do anything for a limited amount of time.
• Boost your skills in order to up your lifetime earnings. Online courses abound to improve your credentials and qualifications. For a small investment, create a chance for increased earning power. Volunteer for special projects at work to increase the likelihood of promotion.
• Stay the course. After you create an appropriate asset allocation percentage for your retirement funds rebalance once per year. In other words, add future funds to the categories that have fallen in value. Keep the predetermined allocation. Unfortunately, the markets make the biggest moves during just a few weeks per year. If you are out of the market during those times, you will miss out. Don't time or second guess your decisions.

For more investing tips, check out my free eBook, 20 Minute Guide to Investing.