Golden Years
Three ways to financially secure retirement " Don't depend on uncle Sam to take care of you"
Dave Burge
Monday, August 22, 2005
Start saving early in your career, participate in a 401(k) if your workplace offers one and pay off your credit-card debt.
Those are some of the common-sense tips that individuals should follow if they want to enjoy a financially secure retirement, financial experts say.
Westsider Lee Dake, 61, says he's enjoying a financially comfortable retirement.
"And it wasn't by accident," said Dake, who served in the Army and worked in the adult probation department.
His advice is to "start saving as soon as you can and don't stop."
"Use those 401(k)s and IRAs that can be tax-deferred for decades," Dake added. "And control your impulse spending. Just because your car has 60,000 miles doesn't mean you need a new one."
As Social Security faces an uncertain future and fewer companies offer traditional pensions, it's up to each individual to plan for his or her retirement, experts say.
"Don't depend on Uncle Sam to take care of you," El Paso certified public accountant Brenda Yeager said.
Social Security was never meant to be the "be-all and end-all" for retirees, Hushbeck said. "It was meant to be a floor of protection."
Ray Vigil, spokesman for the Social Security Administration in West Texas and Southern New Mexico, said Social Security was designed to replace about 30 percent of your pre-retirement income.
"That's why it's so important to look into 401(k)s, IRAs and personal savings to supplement your Social Security," Vigil said.
One of the most important steps you can take is to start saving early, preferably in your 20s when you start your first career-type job, experts say.
But if you haven't started saving, it's never too late to begin putting some money away, experts say.
Through the principle of compound interest, if you start saving in your 20s, you can sock away tens of thousands of dollars more than someone who starts later in life.
"The earlier you start, the better," said Greg McBride, a senior analyst with Bankrate.com.
One way to painlessly save for retirement is to sign up for a 401(k) plan at work.
These plans deduct pre-tax dollars straight from your paycheck. That helps to reduce
your taxable income while boosting your retirement savings.
The savvy saver may also want to start an IRA on the side. Contributions to a traditional
IRA may be entirely or partly tax-deductible, depending on your income level, your
tax-filing status and whether you have a retirement plan at work.
Earnings from a traditional IRA, however, are subject to taxation once they are withdrawn at retirement.
The Roth IRA provides another option. Contributions to a Roth are made with after-tax money, so contributions are never deductible. The big plus, however, is that earnings are not taxed upon withdrawal.
Another step that's crucial to achieving a financially secure retirement is to pay off your credit-card debt while you're still working and preferably while you still have plenty of time left in your career.
The average U.S. household has about $9,000 in credit-card debt at an average interest rate of 17 percent, said Howard Dvorkin, founder of the nonprofit Consolidated Credit Counseling Services Inc.
"And you need to stop using your credit cards," Dvorkin said. "If you pay one down and you charge up another, you're not getting anywhere."
