Creating a retirement savings plan that works

Published 5:50pm Monday, September 12, 2011

In this economy, with food and fuel prices so high, it’s tough for many people to think about, let alone actually execute, a plan for retirement savings.
Sadly, if you’re in your late 50s or early 60s and haven’t started putting money away for retirement, the odds are stacked heavily against you being able to stop working for many years to come, if ever.
If and when you do stop working, it’s likely that you’ll be dependent solely upon Social Security and possibly one or more government entitlement programs – assuming that there will still be entitlement programs in the future.
The real keys to securing a sound retirement are to start saving as early as possible, and saving consistently over time. For example, if invest just $10 a week in a Roth IRA or other savings or retirement plan with an average return over the life of the plan of 7 percent, you would accumulate $7,500 in 10 years and $35,000 after 25 years.
I admit that today, 7 percent seems like an impossible dream return, but over the past 100 years the stock market and many other investments, particularly with the rule of compounding, have averaged about 7 percent per year. The idea is to plan for the future, not base retirement decisions solely upon today’s economy.
There are ways to begin saving. Instead of buying $10 worth of lottery tickets every week, buy one $1 ticket – you don’t substantially increase your odds by buying extra tickets. Put the $9 you didn’t spend on lottery tickets into savings.
Skip that $4 designer coffee and put that $2 savings into your investment account. It’ll save you at least $10 a week and possibly cut several hundred unnecessary calories from your diet.
Brown bag a nutritional lunch to work once or twice a week instead of spending $5 on a high fat, high-calorie fast-food lunch. That’ll save your money and calories over the period of a year.
Before you retire, create a plan. How much money will you need?
The day-to-day expenses of maintaining your lifestyle can be expensive – as much as 70 percent of your preretirement income may be needed to sustain the lifestyle you currently enjoy.
To help you determine your financial retirement needs go to on the Internet and enter the key words “retirement calculator” in the search box; you’ll be surprised by what you can learn.
If your employer offers a retirement plan, contribute as much as possible to that plan. In some cases employers give you matching contributions – that’s free money. If your employer doesn’t offer a retirement account, start your own. I’m a fan of the Roth IRA.
You contribute after tax dollars, up to $5,000 per year, or if you over 50, up to $6,000 per year, and when you retire, all of the capital gains and money in that account can be withdrawn tax free under the current tax code.
There are many other advantages to a Roth IRA, and financial advice can easily be obtained at little or no cost from a financial professional.
One of the best things you can do is pay yourself first. Make your retirement savings as a priority. Look for ways to reduce spending and invest the money you save.
You must think about your financial future and begin planning and making smart choices now.
The truth is you really can’t afford to gamble with your future financial security.

Ron Kauffman is a geriatric consultant and planner in private practice in Henderson and Polk Counties. He is the author of Caring for a Loved One with Alzheimer’s Disease, available at the Polk County Senior Center. His podcasts can be heard weekly at You can reach him at his office at 828-626-9799, on his cell at 561-818-0039 or by email at

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