All Insurance Professionals

There are a lot of stories of people who at age 70, are still working and have no savings in fact, it

seems that the majority of today’s Americans find themselves in the no-savings predicament . Now is not the time to rub in the mistakes made, but learn from them instead and start saving now – while still young and able, to prevent finding oneself in the same situation.

According to the Employee Benefit Research Institute, the average American worker can only save less than $25,000 for their retirement years. And those are due mainly to allotting most of their income to paying the debt. Consumers who are just getting by can’t really save if half of their salary goes to minimum payments to various debts.

So before a consumer can save, the debt must first be eliminated. Here are some ideas on debt elimination :

The consumer must identify and separate the debt type from secured to unsecured. The secured debts would be those that are tied up to a property (or collateral) and the unsecured ones would be those that probably have high interest rates because they are not secured by a property (ex. Credit card debts ).

Once the consumer has separated the secured and unsecured it’s time to calculate their balance and

interests to know be able to put them in order of priority.

For unsecured debt, the consumer doesn’t have to take out a loan or file bankruptcy and ruin their

credit. There are a couple of debt relief programs that cater to credit card debts and other unsecured

debts and it only takes 5 years or even less than that to be debt free. It’s a radical and faster way to

eliminate debt compared to paying the creditors the minimum each month.

There’s nothing that can be done if the consumer’s debt is mostly secured, other than take a debt

consolidation loan or file bankruptcy. These moves though would depend on several factors. One is the consumer’s credit score and the other is their age. If the consumer is a retired/senior citizen, although this shouldn’t be considered as an expert advice, it’s advisable for them to file bankruptcy. The reason is that they don’t have much need for the credit report. Another is they have served their time and it’s the government’s turn to help them out. For those who are not yet retired, a good credit score would serve them well in obtaining a debt consolidation loan. Good scores get the best deals when it comes to loans.

How to prepare for retirement

-Sign up to 401(k) plan, if your employer offers it and do your best to contribute to it faithfully.

-Learn more about pension plans. Your employer’s traditional pension plan if there’s any, find out if

you’re covered, understand the benefits it offers and if they can be carried over to your next job, if ever you switch jobs. If you are married, your spouse must do the same thing and on your part, find out how you can benefit from their benefits.

-Learn about some basic investing principles. Find out how your savings or pension plan is being

invested and if you have a hand on them, make sure to diversify your investments. This way, you can reduce the risk of losing and have a chance at a more improved return.

-Never touch your retirement savings. At least not until after they’ve reached their maturity. If you

touch them prematurely you stand to lose a lot. You’ll lose principal, interest and maybe tax benefits

as well. You may even find yourself paying for withdrawal penalties. And regarding changing jobs,

make sure that your savings go to your current retirement plan or if that’s not possible, to your new

employer’s. The point is, to put it in a place where you won’t be tempted to touch them because there are consequences. There’s another option, you can roll over your savings to an Individual Retirement Account (IRA). IRAs can also give you tax advantages. While you’re still working, $5,000 a year into the IRA is a good input it can be lower. When you are older and have lesser expenses, perhaps you can put some more into it.