It's America Saves Week!
It’s America Saves Week! What should you be saving for?
America Saves Week 2021, February 22 – 26, is an annual call to action for everyday Americans to commit to saving successfully. TopLine and LSS Financial Counseling are encouraging savers nationwide to set a goal for savings and make a plan to improve financial stability. So what are some of the things you should be saving for?
To retire comfortably, a common rule of thumb is to have enough so you can live each year on 80% of your pre-retirement income. However, the exact amount for you will depend on several factors.
- How much will you spend?
Will you still have a mortgage payment, or is your house paid for? Do you have other outstanding debt that you will still be paying in retirement (student loans, home equity loans, car payments)? Will you move into an apartment? Do you plan to travel a lot? Do you already have significant medical expenses?
- What other sources of income will you have?
How much will you receive in Social Security benefits? Will you have a pension? Do you plan to take on part-time, temporary or free-lance work? After calculating income, you’ll need to estimate how much you will need to withdraw from your investments each year in retirement.
- How much will you earn on investments?
This will depend on the particular investment. While no one can predict future earnings, stocks have traditionally earned more than bonds. Bonds have earned more than certificates of deposit (CDs), and CDs have earned more than money market savings accounts/
- How long will you live?
No one really knows, of course, but you can look at average life spans. Also, think about the about the ages of your parents and grandparents when estimating life span.
It is important to save for the unexpected – like job loss, illness/injury, emergency vet or doctor visits or car troubles. There’s no need to start panicking – just be realistic because at some point, we all have to deal with a stressful situation that comes up out of the blue — and likely costs money. Take advantage of savings moments to put money into your emergency fund.
- It’s tax refund season. Plan to put at least one-third to one-half of your refund into emergency savings. A great way to kick-start your savings fund!
- Save any loose change from cash purchases.
- Any time you don’t buy that expensive coffee shop drink, transfer what you would have spent into savings.
- Cancel or reduce an expensive subscription permanently or temporarily and transfer the amount you would have paid into savings.
- Think about your next raise. Instead of planning how you’ll spend it, put your raise from each paycheck into savings. Your pay will stay the same, you won’t miss it and your savings balance increases.
Planning a vacation? Looking to upgrade your TV? Establish a time frame to achieve this goal, then decide how much you need to save each month. Let’s say you plan to take that vacation next year and it costs $4,500. If you have nine months to save, that means you’d have to save $500/month. If you have a year, it would be $375/month.
Being a TopLine member gives you and your family access to up to six (6) free private and confidential financial education counseling sessions annually with a certified consumer credit counselor from LSS Financial Counseling. Sessions are available by phone, in-person or online. Contact LSS today for your free financial education session at 1-800-528-2926 or visit LSS online and mention you are a TopLine member.