According to a 2010 survey on retirement confidence, about 70% of workers plan to work for pay during retirement. In today’s poor economic conditions many Americans have no idea how to plan for retirement. Fortunately, SmartMoney.com has published a great article explaining how you can make reductions in your sending now to help save for your future. Check out a section of their useful article below.
Trim your housing costs
Consider trading down to a smaller home. Doing so can not only allow you to plow your gains (if you have them) into a retirement savings account, it can also help shrink your taxes, utility bills and home maintenance costs, says Jean Setzfand, the director of financial security for AARP. If you plan to buy rather than rent, which might also deliver some savings in this market especially, be realistic. Purchase only what you need, not what others will buy, she says. “A house is not an investment.”
Keep taxes in mind
Consider moving to a place that offers tax advantages, suggests Mark Kennedy, the president of Kennedy Wealth Management, an investment advisory firm in Woodland Hills, Calif. Alaska, Florida, Nevada, South Dakota, Wyoming and Washington, for example, don’t have state income taxes. New Hampshire and Tennessee tax dividend and interest income only, while Oregon, Alaska, Delaware, Montana and New Hampshire don’t levy a sales tax. Further, he adds that homeowners over the age of 55 who move within the same county in California can carry their property tax basis with them as long as the new home is of equal or lesser value than the former home. (Note that this transaction is only allowed once in a single individual’s lifetime.)
Eliminate pricey debts
Although some debt such as a mortgage and student loans can offer valuable tax deductions, other debts are just plain worthless. Before you can even begin to save, you have to eliminate high priced debts such as credit cards or payday loans, says Adam. Even mortgages can keep you lodged in a hole, she says. “Start paying down extra on mortgage or your credit cards each month, then you can really save.”