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9 Tips to Help You Plan Your Retirement

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Making financial decisions can be confusing and overwhelming, to the point that you do nothing to prepare for your financial future. But this Financial Literacy Month, we’re helping you understand finance basics so you can make money decisions with confidence.

Step one was understanding your credit.

Step two is planning and preparing for your retirement. Starting early will help you establish a sound financial future down the road. These tools and tips will help you get started.

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The State of Older Americans and Saving

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By Katie Bryan, America Saves Communications Manager

The numbers are shocking.

  • In 2012, the average credit card debt among adults aged 65+ was $9,283 (Demos).

  • One-third of senior households has no money left over each month or is in debt after meeting essential expenses (Institute on Assets and Social Policy).

  • The share of Americans 65 and older in the labor force went from 12.1 percent in 1990 to 16.1 percent in 2010 (Census).

  • 60 percent of women over 65 across the country lack the incomes to meet basic expenses (Wider Opportunities for Women).

America Saves is stressing the need for all Americans to save for their future. With Americans, especially women, living longer – the reality is that Americans need to save more money for retirement or to work longer.

Tips to Prepare to Live Debt Free in Retirement

  1. Start saving, keep saving, and stick to your goals

  2. Know how much you will need for retirement

  3. Save at work and/or through a Roth IRA

  4. Find places to cut back so you can save more

Already Retired and Need Help: You Gave, Now Save

Millions of low-income seniors continue to miss out on nearly $1.2 billion in benefits (PDF) that can help them pay for their health care, prescriptions, food, utilities, and more. These aren’t handouts—by working hard their whole lives, older adults have paid into the programs that can now provide them support needed to remain healthy and independent.

  • BenefitsCheckUp —a service of the National Council on Aging (NCOA)—is the nation’s most comprehensive web-based service offering information on benefits programs, specifically programs for people with Medicare and limited income and resources.

  • The Eldercare Locator, a public service of AoA and administered by n4a, is a nationwide service that connects older adults and their caregivers with information on senior services. The Locator is available both online Eldercare.gov and as a toll-free hotline at 1-800-677-1116.

Secure your child’s education with a 529 Plan

When they’re young, children dream about becoming doctors, artists, teachers, veterinarians, and many other things. But in order for those dreams to come true and for kids to actually become professionals, it’s important for them to attend and finish college.

A good college education can lead to that dream career. Though it’s a major investment, there are flexible payment plans that can help.

529 Plans

Known as the “College Savings Plan,” 529 Plans let you start investing early for your children’s future college career. These plans are generally sponsored by the state, state agencies or educational institutions.

There are two types of 529 Plans:

1. Prepaid tuition plans. Also called “guaranteed savings plans” in some states, this plan locks in future tuition rates at public institutions. Some private universities also offer similar plans.

2. College savings plan. This one is similar to a 401K retirement account, but the money you invest is only used to pay for your child’s education. You can choose the amount (free of taxes) to be deducted from each paycheck. The amount saved will be used to pay for college when the time comes, or it can be used for related expenses, such as housing, books or school supplies. 

To open a 529 Plan, contact your state’s program administrator.

Benefits

Depending on your choice, your 529 Plan will let you:

  • Select a plan regardless of your income or age of your children.
  • Transfer your plan from one state to another. You can use this online tool to compare state plans.
  • Have control of your money and manage it the way you want.
  • Allow anyone to contribute to the savings plan, whether it’s a family member or friend.
  • Transfer your plan to help someone else pay for school.

529 Plans are tax-free, as long as the money is used to pay for college. If, for any reason, you decide to use the savings for something else, you can withdraw the money as long as you pay the taxes due.

Resources

Use the College Savings Calculator to figure out the amount you must invest each month to cover all your child’s educational costs. The budget calculator will help you compare school expenses against your income and financial aid.

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