How to Build Your Nest Egg with Fewer Twigs
1/9/2013 1:48:11 PM

"One big thing to do is to look at your retirement plans a few years before you plan to retire,” says Mark Eckard, LPL Financial Advisor with Rau Financial Group. "If you see that your nest egg is smaller than it needs to be, there are some things you can do to stretch your golden year dollars now, so that you can still achieve the retirement lifestyle you’ve always dreamed of. "

For example, if you’ve been setting aside money in individual retirement accounts, make sure you understand the tax implications for withdrawing the money. Each IRA works differently and tapping into the right pool of cash can sometimes make your money stretch. Determining which pool is the right one can be complicated, however, and may require the insight of a qualified financial professional. "Accounts like Roth IRAs and traditional IRAs work differently and the rules are rarely simple. One investment vehicle taxes withdrawals, while another doesn’t. But the answer isn’t cut-and-dried. Finding out where and when to safely save and withdraw your money depends greatly on market conditions and tax rates, so it’s important to determine an answer with the help of someone you trust,” Eckard said. "You should also consider investments that guarantee income for life. This removes the stress of worrying about market changes and running out of money.”

Another way to make your money last is to put retirement on hold to bulk up investments, including Social Security benefits. Eckard says each additional year you work adds another year of earnings to your Social Security record, and higher lifetime earnings may result in higher benefits when you retire. According to the Social Security Administration, each year a person delays retiring and accessing their Social Security, their monthly benefit when they do retire increases in value by about eight percent.

"People are living longer and aging better, so for many people, putting off retirement for several years isn’t a tremendous sacrifice,” Eckard said. "It’s one of the simplest ways to allow your retirement savings to grow.”

In addition to putting off retirement for a few years, you may also consider putting off small luxuries that cost you money. "This advice could work for anyone – not just those who are building up for retirement, but anyone who wants to save money,” Eckard said. "There are many habits we have that cost us a lot financially, and we’re often unaware of exactly how much. It may not seem so at the time because the initial cost is small, but all those dollars and cents add up. Eating out is a prime example. If you go out for lunch just three times a week, you are likely spending a hundred dollars or more each month. Buying name-brand groceries instead of generic brands can also cost unnecessary dollars, as can lavish vacations and other perks like coffee shop coffee.”

According to the Bureau of Labor Statistics, the average couple that earns more than $70,000 annually spends $3,000 on travel and more than $4,500 on restaurants every year. That’s about eight thousand dollars that could be going into your retirement nest, Eckard said.

Cutting back can also apply to your bigticket items. Opt for a practical, low-cost vehicle instead of the fully-loaded luxury car. Or if you want those extra perks, consider buying a used luxury car instead. Downsize your home. Remember, retirement is about rest, relaxation, family, leisure and travel. You don’t need a huge home or $40,000 vehicle for that.

"The best way to figure out how to make savings more substantial is to put everything on paper, preferably with the help of a trusted financial professional. You want to do more than map out a budget – you want to figure out where you’re spending your money, where you’re investing your money, how much those investments are worth, how much you have vested in Social Security, what your goals are for retirement, and how much money you’ll need to achieve those goals,” Eckard said. "Obviously, this kind of planning takes a considerable amount of time and effort, and it requires a realistic look at your financial situation. But at the end of the day, it’s worth it. When you’ve worked hard your adult life, you deserve to spend your retirement years the way you want.”

For more information about retirement planning or to schedule a consultation, call Rau Financial Group at 480-3835 or visit

Posted by: Kristy Armand | Submit comment | Tell a friend

Categories: Finances

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