Centurion Company Reviews - For years, Wall Street has been telling us the same thing: Save and invest as much as you can for retirement by trying to obtain as high a return as possible.
With bond returns sagging in a slow growth economy, this advice isn’t particularly helpful.
The only thing we can do outside of saving more is to control our spending. Accumulating assets is great, but how to keep expenses down now and in retirement isn’t something Wall Street likes to talk about.Most of us are still spooked by stock-market volatility, insider trading, hedge fund shenanigans, bank derivatives and poor regulation. Now we have to worry about a skittish bond market and the end of the Federal Reserve’s monetary easing policies — throwing yet another monkey wrench into the works.
The delicate balance between saving and spending involves a plan. But most people don’t like to do it. Even with all of the financial turmoil of this young century, less than half of workers over 45 have even bothered to calculate how much it will cost to retire,according to the Employee Benefit Research Institute (EBRI), a private research organization.
Granted, there’s just too much uncertainty in retirement planning.
Middle Baby Boomers like me who got married late are still worrying about college expenses. Healthcare costs are sure to go up as Medicare is eventually overhauled. The outcome of the roll-out of the Affordable Care Act is still a moving target. If we’re in a slow-growth economy, then stock returns may not float our boat in retirement.
The only thing we know for sure, at least according to the EBRI research, is that we’re likely to retire later. The good news? You can still plan and there are plenty of tools out there to help you.
The best initial approach to retirement planning is to stop worrying about accumulating assets. Focus on boosting your savings rate while cutting spending. Use retirement calculators to plot out some scenarios. Can you downsize your home and cut your living expenses, taxes and transportation costs? Plug that into a calculator. Would moving to a lower-tax state help reduce your income-tax burden? Would eliminating some major expenses like car or mortgage payments make a difference? Run the numbers.
Here are some useful free calculators online that I like.
* ES Planner. This unique tool focuses on maintaining your standard of living by adjusting spending, rates of return and maximizing Social Security. The Basic version is free, but you can pay for more computing power if you upgrade.
* T. Rowe Price. The mutual fund company offers a suite of tools ranging from a Social Security benefits calculator to a “Ready-2-Retire” tool.
* Ultimate Retirement Calculator. This more comprehensive tool allows you to plug in part-time and business income, inheritances and other one-time benefits.
At the very least, ignore the ads from Wall Street proclaiming how much money they make. Settle down and run the numbers.
I know it sounds unsexy and dull, but you can yield some surprising results when you combine a spending and savings strategy. It’s a two-fisted approach that can work for anyone who’s disappointed with markets and current yields.
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