Retirement can easily last more than twenty years so that old
advice that you need one million dollars to live off of is no longer
applicable. After all, medical costs for the average retired couple can
easily cost $220,000 alone, according to Fidelity Investments. Add
housing expenses and the cost of food and entertainment, and it’s easy
to see why one million dollars isn’t enough to live off of in
retirement.
Whether you have amassed a sizeable nest egg or you have a lot of
catching up to do there are ways to boost your retirement savings. From
maxing out your company sponsored retirement plan contributions to
opening up an IRA, here’s how to do it.
Take Full Advantage of Company-Sponsored Retirement Plans
One of the easiest ways to start saving for your retirement is to
fully take advantage of a retirement savings plan being offered by your
company. Not only are these savings vehicles tax-advantaged, which means
your contributions are tax-free, but companies often offer a matching component
that in essence gives you free money. It may seem like a no- brainer,
but far too many employees choose not to get the full match from their
employer and some don't contribute to a 401 (K) at all. But setting
aside even as little as $50 per pay check can go a long way in
increasing the amount you save.
Open Up an IRA
Many people will make the mistake of contributing to a 401 (K) plan
and nothing else. They wrongly figure that is enough to support them in
retirement. But if you want to boost your savings even further, then
it’s a good an idea to open up an IRA. When it comes to an IRA, savers
can either go with a traditional IRA or a Roth IRA. With a traditional
IRA contributions are tax deductible, and you don’t pay taxes on your
gains until you withdraw money. With a Roth IRA, the gains from your
contributions are tax-free.
Contribute the Maximum in Your 401 (K) and IRA
The whole idea behind company-sponsored 401 (K) plans is to get
employees to put money away for retirement. The tax-free component of it
is supposed to serve as an added incentive to contribute as much as
possible. But most employees don’t go all the way and contribute the
maximum allowed, despite the benefits of doing so. If you want to
enhance your retirement savings and can swing it, contributing the
maximum will help a lot. For 2015, people 50 or older can contribute up
to $24,000, and those under 50 can contribute up to $18,000. The same
idea can be applied to an IRA as well. For 2015, savers 50 or older can contribute a maximum of $6,500. The maximum is $5,500 for people younger than 50.
Rein In Your Spending
One of the easiest ways to boost the amount of retirement savings you amassed is to rein in your spending.
In this instant gratification culture, it’s easy to waste money on cups
of coffees, trips to the nail salon or eating out three nights a week.
But if you were able to curb some of that spending and instead put it
into your retirement savings account you will be better off in the long
run. After all that $5.00 cup of java may be tasty but if you put the
money you spend on coffee each month into your 401 (K) it will grow a
lot.
The Bottom Line
Retirement can conjure feelings of fear and stress, but it doesn’t
have to be that way, granted you save in advance. Whether you have been
savings for years or are just starting out, there are ways to boost the
amount you put away for your golden years. From taking full advantage of
company-sponsored retirement accounts
to reining in your spending, there are a lot of ways to ensure you have
enough money when you eventually walk off into the retirement sunset.
The American dream of homeownership can quickly turn into a nightmare
when you’re constantly being hit with unexpected expenses. Egypt
Sherrod, HGTV host of “Property Virgins” and “Flipping Virgins,” shares her tips on how to prepare for some of the hidden costs.
Landscaping
Depending
on where you live, landscaping can be a huge bill to consider. When
Sherrod moved to Atlanta from New York City, she was billed $200 to get
an acre of land mowed by a professional service. If you want extra curb
appeal, add another $400 for seasonal flowers.
If that’s not in
your budget, Sherrod recommends investing in a riding lawn mower. It
will cost you about $2,000 to purchase but will pay for itself within a
year — and you won’t have to rely on a service you can’t afford.
Gutter cleaning
Every
six months you’ll need to clear your gutters of built-up debris like
dirt and leaves. Failing to maintain the exterior of your house will
result in costly and dangerous problems like mold. If you don’t plan on
cleaning your gutters yourself, you can expect to pay $200 to $300 for
the service.
A one-time installment of gutter guards can save you
the hassle of dealing with this issue, says Sherrod. A gutter guard
looks like a metal grate and shields your gutters. It can cost anywhere
from a few hundred if you install them yourself to a few thousand if you
get it done professionally. But once you set it, you can forget it.
Repairs
Replacing or repairing a
big-ticket item can set you back thousands — which is especially a risk
if you’ve purchased an older home. Replacing a water heater can easily
run you $600 to $2,000, and repairing an HVAC system can cost you
another few thousand.
For $300 to $400 a year, a home warranty is
probably your best bet, says Sherrod. Not to be confused with
homeowners insurance, a home warranty provides repair and replacements
on major systems within your house like plumbing, HVAC systems, and even
your pool. Once you report your problem to the warranty company,
they’ll send someone out to fix it. If they can’t fix it, they’ll
replace it.
This July 2013 photo shows
people walking down West Idaho Street in a farmer’s market in Boise,
Idaho. Sure you have to pay for the locally grown fruit, vegetables,
grass-fed beef or the various arts and crafts for sale, but the sights,
smells, sounds and people-watching are free at Boise’s version of the
classic farmer’s market. In three separate spots downtown, vendors set
up shop on blocked-off city streets or plazas each Saturday morning from
April through December. (AP Photo/Boise Parks & Recreation, Bill
Grange)
Arizona and Florida are perennial favorites for retirees and snowbirds, but not everyone wants to follow the flock. Maybe you'd prefer to scout out someplace new.
If you're looking for a city still undiscovered by
the masses, the following three cities have all the hallmarks of being
the perfect place to retire. Don't be surprised if they end up being the
next top retirement destinations.
For
each city, population figures are 2014 estimates from the U.S. Census
Bureau, and housing prices are based on calculations from real estate
website Zillow. Cost of living was calculated by CareerTrends, using
2013 data from the Economic Policy Institute. The cost of living index
is based on a 100 point scale, with 100 representing the national
average. Numbers under 100 mean average cost of living expenses are
lower than the national average. Las Cruces, New Mexico
-- Population: 101,408 -- Median House Price: $137,300 -- Cost of Living Index: 92
Las
Cruces is ready to roll out the red carpet for retirees. The Las Cruces
Green Chamber of Commerce offers a welcome kit for new senior residents
that includes not only details about the city but also special
discounts and offers.
Carrie Hamblen, executive director of the
Las Cruces Green Chamber of Commerce, says one of the big draws in the
area is the Organ Mountains-Desert Peaks National Monument. "It's
literally in our backyard," Hamblen says. "It's a 15 minute drive from
my house."
The monument was established by President Barack Obama
last year, and its designation could bode well for the future of Las
Cruces as a retirement destination. A 2015 report from the Center for
Western Priorities found retirees are three times more likely to move to
a Western county with protected lands.
Organ Mountains-Desert
Peaks is marked by features such as the historic La Cueva rock shelter
and Kilbourne Hole, a crater remnant from an ancient volcanic explosion.
Active retirees can head to the monument for hiking, biking, horseback riding and climbing.
However,
it's not only outdoor recreation that's attracting retirees to Las
Cruces. They also come because of the low cost of living. "Folks who
come here from California can easily buy a mansion," Hamblen says.
There are also two hospitals, public transportation and, for lifelong learners, continuing education options through New Mexico State University and Dona Ana Community College.
"We're very excited to welcome people to our community," Hamblen says. "Come enjoy our open spaces." Lexington, Kentucky
-- Population: 310,797 -- Median House Price: $152,700 -- Cost of Living Index: 97
Travis
Musgrave, a managing director and wealth management advisor with
Merrill Lynch, has spent all 47 of his years in Lexington, Kentucky, and
works with many retirees who choose to make the town their permanent
home. Thanks in part to a large population of college students, the city
has a youthful feel and can be a good choice for those who want to grow
old in a community that doesn't make them feel old.
"We're small enough that you get some of that small town charm, but you also get big city advantages," Musgrave says.
Those
big city advantages include medical centers with cutting-edge cancer,
heart and Alzheimer's centers as well as public transportation, biking
and walking paths, and easy access to highways. "We have a mayor who's
put a lot of effort of into making a downtown that's vibrant and very
livable," Musgrave says of the city's atmosphere.
An added perk
for seniors 65 and older is the opportunity to take classes for free
through the Donovan Fellowship for Academic Scholars program at the
University of Kentucky.
As a wealth manager, Musgrave sees the
cost of living and tax rate in the city as two of the biggest benefits
to retirees. For instance, Lexington doesn't levy an income tax. Kentucky also won't tax your Social Security benefits, and it exempts some pension income from its state tax.
"From a financial standpoint, Lexington offers a lot of attractive things," Musgrave says. Boise, Idaho
-- Population: 216,282 -- Median House Price: $185,100 -- Cost of Living Index: 104
Boise
is already on the radar of many retirees, says Jeff Martel, a broker
and owner of Better Homes and Gardens Real Estate 43° North. His firm is
currently developing Heritage Grove, a community for those age 55 and
older, and Martel notes they have sold property to people from every
part of the country.
When asked about the appeal of the city, Martel says, "I see Boise as the last affordable mountain town in the West."
Karen
Davis, 72, is one retiree who's been taken in the by the community.
After 40 years of living in Huntington Beach, Florida, Davis moved to
Boise eight years ago to be near her son. "I looked into going to
Arizona or other places, but Boise had everything I was looking for,"
she says.
Like Las Cruces, Boise benefits from being in close to
outdoor recreation options. The 25-mile Boise River Greenbelt is a
highlight for those who want to walk or bike. Meanwhile, skiers will
find only a 45-minute drive to world-class resorts. While it snows in
the winter, Davis calls it "designer snow" because it shows up, looks
beautiful and then disappears almost as quickly as it arrived.
The
low cost of living was another draw for Davis who estimates her
expenses in Boise are more than a quarter less than they were in
Huntington Beach. Plus, she says her lifestyle is a step up from
anywhere else she's lived. Davis has an apartment at the Affinity at
Boise senior living community home, which she likens to living at a
hotel. The building offers an indoor swimming pool, library, movie
theater, onsite beauty shop and other amenities.
Above all, Davis
likes the slower pace of life and friendly atmosphere in Boise. Martel
says that's something his clients notice and appreciate as well. "People
still wave at you here," he says.
