A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Tuesday, February 08, 2005

12 Ways to Build a Nest Egg for Retirement

The other day I received an offer from Kiplinger's. Included with the offer was a card titled 12 Grade-A Ways to Build a Nest Egg for Retirement. I thought I'd share them with you:

1. Save early and save often, starting NOW.

2. Don't forsake the stock market. Stocks are likely to offer your best chance for long-term growth. Use a diversified portfolio to balance risk and reward.

3. "Buy low and sell high." Rebalance your portfolio annually as a good way to build your walth for the future and to keep from getting burned now.

4. Get your employer to save for you. Contributel at least enough to your 401(k) to get the full employer match.

5. Follow the money. Get a handle on what you spend each month, plug leaks in your budget and divert savings to your retirement fund.

6. Take advantage of tax-free savings. Over two decades, you'll pile up almost $200,000 (assuming 10% annual returns). In a Roth, it's all tax-free in retirement.

7. Catch up to your savings. If you're at least 50 years old, take advantage of "catch up" rules that let you stash even more in 401(k)s and IRA tax shelters.

8. Back to the future. You're likely to spend 25% of your life in retirement. Dedicate a quarter of raises and bonuses to your retirement fund.

9. Don't let benefits slip through your fingers. Check your annual social security benefit statement for accuracy and know how much you can count on from Uncle Same. Check out Social Security Administration.

10. Protect your money. Empy nester? Consider trading excess life insurance for a long-term-care policy to protect your next egg from nursing home bills.

11. Rehearse for retirement. One year to go? Rehearse by drawing up a retirement budget and living within it.

12. Profit from your profits. Use tax-free profit from the sale of your home to feather your nest egg.

There you have it. I thought these were worth sharing.