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Five Rules To Saving For Retirement

By Bill Losey

A recent study revealed that corporate America's commitment to workers' retirement plans, has dropped consistently over the last decade. The research found that the total retirement benefits provided to employees decreased from 7.8 percent of pay in 2002 to 6.9 percent of pay in 2008 and the value of the overall benefits declined from 9.4 percent to 8.6 percent of pay.

As more than half of all workers in the United States, 53 percent, have less than $25,000 in total savings and investments and with longer life expectancies and rising costs, especially for health care, it is critical that Americans understand the importance of taking matters into their own hands, stop solely relying on their employers to contribute to their retirement and start saving for their own future. Now is the time to start saving for retirement:

1. The Automatic Rule: Start saving money today. Even if it’s only a buck or two each pay period, savings is a habit you must start and stick with for the rest of your life. To improve your chance of savings success, automate the process. Have money withdrawn automatically from your paycheck or directly from your checking account each month. If you don’t want to think about  saving, automation can take care of it for you.

2. The 1% Rule: At a minimum save 1% of your earnings each payroll period. When you get a salary increase, add an extra percent to your savings  and spend the rest. For example, when you get a 3% increase at work, save 1% and spend the other 2%. This way you’ll continually increase your savings rate while enjoying a higher standard of living.

3. The Time Rule: When I meet with people in their 50’s and 60’s, the one regret they have is that they had wished they’d starting earlier in life. It’s  never too early or too late to start saving for retirement. Time is your friend. It can work for you or against you. It’s your choice.  Choose wisely.

4. The Spending Rule: The less money you take out, the lower inflation is, and the higher return you earn on your money, the  longer it will last.  Conversely, the more money you take out, the higher inflation is, and the lower your return is, the shorter your nest egg will last.

5. The Most Important  Rule: The  government and your company will not take care of you. Read, listen and learn about personal finance, investments and strategies. In the end, your financial well-being is your personal responsibility. Control what you can control.

Bill Losey, CFP®, CSA, America's Retirement Strategist®, is a highly sought-after advisor, retirement authority, thought-leader, author and TV personality because he makes the complicated and mundane topics of investing and retirement fun! Bill has over 20 years experience in the financial services industry and is a Certified Financial Planner practitioner, a Certified Senior Advisor and Certified Retirement Coach.  He is the author of Retire in a Weekend! The Baby Boomer's Guide to Making Work Optional (a 2008 Finalist at The Indie Excellence Book Awards), Founder of National Retirement Planning Month, and he publishes Retirement Intelligence®, an award-winning weekly newsletter that reaches thousands of subscribers worldwide.

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