Senior News and Information

SRES JULY 2011 NEWSLETTER

Zero In on Retirement Dollars

It's never a bad thing to analyze your finances pretty regularly. We've been poking around research done by Transamerica Center for Retirement Studies, a non-profit foundation focused on retirement security.

We found some cool tools at its site (www.transamericacenter.org/resources/tc_index.html) to help you crunch your numbers this quarter.

Sweet treats' worth
You've heard that ubiquitous tip about cutting wasteful little habits. It's often called the Starbucks effect. The advice usually goes like this. "Slash your daily coffee consumption and save a bundle."

A little basic math on your part shows the monthly hit your daily treats have on your  budget. But for truly eye-popping--and motivating figures--take a look at the long-term savings you could realize by eliminating that coffee-milk-caramel concoction from your daily routine.

Transamerica Center for Retirement Studies' "loose change" calculator (www.transamericacenter.org/resources/calculator_loose_change_01.asp) makes it a cinch.

Just plug in your age, the cost of your habit, and a few other details. You'll find, for instance, that a 55-year-old intending to retire at age 65 and who buys a $3 cup of coffee every work day will sink a total $9,045.46 on this treat by the time he or she retires. Invest the money instead, and it could grow to $13,355.44. The above figures are adjusted for inflation.

Up the ante a bit and see the long-term cost of a pricier treat, like a $23 weekly Sunday brunch for a 50-year-old looking to retire at age 65. By the time that “bruncher” retires, he or she will have spent $22,656.42 on bacon and eggs. Investing the breakfast dollars could yield $40,758.82. Again, the above figures are adjusted for inflation.

So just how sweet are those daily or weekly treats? It's your call.

Next Steps

Now that you've calculated where you can hunt down additional dollars to save each year, the Transamerica site offers some insight that can be a huge help in deciding how to manage and protect that found cash.

And if you've not developed a retirement strategy, it's not too late.  The site features an array of surveys, studies, tax tips, and retirement education.

In addition, you can learn about lesser-known benefits to tap, such as catch-up contributions for those over age 50 and the Saver's Credit, a tax credit for low- to middle-income tax filers.

It's little surprise that Transamerica's "The New Retirement: Working"  study (www.transamericacenter.org/resources/TCRS12thAnnual%20WorkerNewRetirementFINAL05162011.pdf) found that workers' two biggest retirement-related fears were outliving their savings and investments and not being able to meet the financial needs of their families.

That May 2011 report includes some strategies that will help you to respond to those fears. They include:

• Formulate a plan and write it down: Only 10 percent of workers have written out their retirement strategy, according to the report.
• Get educated: The majority of workers (71 percent) say they don't know as much as they should about retirement investing.
• Weigh retirement benefits as part of your total compensation package: 53 percent of workers would select a job offer with a higher than expected salary, but poor retirement benefits over one with excellent retirement benefits and minimum salary requirements.
• Participate in employer retirement plans: 22 percent) who are offered a plan at work don't participate.
• Take advantage of the Saver’s Credit and make catch-up contributions: Just 25 percent of workers know about the Saver’s Credit. And Transamerica found that only 56 percent of workers know that those who are age 50 and older may be eligible to make catch-up contributions to retirement plans.
• Have a Plan B, if you can't keep working to your planned retirement date: Only 19 percent of workers currently have a backup plan.

Sighing with relief

Yes, retirement studies and calculators routinely deliver feel-bad results.

But if you're one who started saving at a young age and made all the right financial moves, run your savings figures through Transamerica's "saving up" (www.transamericacenter.org/resources/calculator_saving_up_01.asp) calculator.