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5 Keys to Hitting Your Retirement Goals

By U.S. News & World Report

One keystone goal in retirement planning is to know how much to save for a decent retirement lifestyle.

Conventional wisdom among investment professionals is to aim to replace approximately 80 percent of your pre-retirement annual income to keep living as comfortable after retirement as you were before retirement. For example, if your workplace paycheck amounted to $100,000 each year, you’d require $80,000 of savings annually to keep your current financial lifestyle intact. What’s the best way to get that job done?

[See: 6 Strategies to Avoid Working in Retirement.]

Stay on the right path with these five retirement savings keys.

Build a comprehensive savings plan, and stick to it. This should be obvious, but most Americans don’t adhere to a solid retirement plan process. According to a recent study by the National Institute On Retirement Security, 45 percent of American households have no retirement plan.

“This is one major piece where a majority of everyday investors fall short,” says Ryan Kwiatkowski, director of marketing at Retirement Solutions in Naperville, Illinois. “Even people who do save think they can contribute to my 401(k), and once retired, can live off of that amount, plus Social Security. Is that money going to be enough? What happens if the next 2008 happens the year before you retire, or during your first year or years of retirement? Are you going to need to save some additional money?”

This simple step in planning to achieve a goal is often overlooked. “How will you know when you reach your retirement goals if you never built a plan in the first place?” Kwiatkowski says.

Take advantage of employer matching. You’d be shocked to learn how many Americans are unknowingly declining offers of free retirement contributions from their employers through 401(k) or 403(b) retirement plans.

“For example, if you contribute 5 percent of your salary to your retirement plan offered by your employer, they agree to match your 5 percent with their own money,” says Rodger Friedman, a retirement planning specialist and author. “If you contribute $250, your employer would match it with a $250 contribution. That’s a 100 percent return before the funds are even invested.”

[Read: How to Create a Retirement Investing Strategy.]

Pay yourself first. “Contribute at least 10 percent of your pre-tax income to your employer retirement plan,” says Dennis McNamara, a financial planner at Lighthouse Financial Advisors in Red Bank, New Jersey. “By paying yourself first, the money is invested and set aside for the long-term goal — being financially independent — before you ever have the opportunity to spend it.” Couple that move with maxing out on your 401(k) every year you work, and you’ll be well set up for retirement, he says.

Save like you’ll live to 100. Plan on having your cash outlast you, says Ron Kloth, a money manager at Dynamic Wealth Advisors, in Tempe, Arizona. “With life expectancy rates increasing, it’s important to plan for a long enough period of time so that you don’t run out of money too soon,” he says. “I use the age of 100 as my default number when setting up financial plans as few people will outlive that number.”

Make sure you have multiple baskets of cash from which to be able to pull from, he says. “Having money invested in different types of accounts (401(k)s, traditional IRAs, Roth IRAs and taxable accounts) will give you added flexibility, in a tax-advantaged way.”

Know what you’ll be spending in retirement, especially on health care. “Get a handle on what current expenditures will continue into retirement,” says Veronica Welch, owner of CWR & Partners near Providence, Rhode Island. “Make sure you don’t underestimate the impact of inflation, and understand how things like rising, non-reimbursed health care costs will need to be met, as well.”

Additionally, put together a full or holistic plan that addresses key issues such as paying for long-term care. “Recent news about further cutbacks in Medicaid could make things brutal when it comes to people being able to take care of themselves when they get disabled,” Welch says. “Few people are addressing this problem and there are ways to do so without necessarily buying insurance.”

[See: 9 Dividend ETFs for Reliable Retirement Income.]

By covering these five areas in your retirement planning campaign, you’ll significantly increase your odds of having the retirement you’ve dreamed about. That should be incentive enough to redouble your efforts, as you inch closer to that first day of retirement, whether that’s a few years, or even a few decades, from now.

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5 Keys to Hitting Your Retirement Goals originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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