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Saving For Tomorrow, And Today

The idea of retirement is posing new challenges for many people these days. Folks are living longer and healthier lives, but those lengthening lives are also costing more and more money.

Are there ways to cover the rising costs? The simple answer is “yes.” An extra $100, for instance, set aside monthly and growing at a rate of 8 percent, can become a tidy $60,000 over 20 years of compounding.

But where do you find that extra money? For starters, you might turn to the adage “Use what you need, but need what you use.” In other words, are there drains on your budget you can plug without changing the quality of your life?

Consider the following tips for saving some extra money:

• Rising gasoline prices are no doubt causing you to wince. Have you thought about carpooling or public transportation where available? If you’re a commuter, joining others for the ride to and from work will provide savings not only on gas, but also on wear and tear to your vehicle. Potential savings: $60 per month. Similarly, sharing the weekly shopping run with a neighbor can mean substantial savings and a chance for a good chat as well. Potential savings: $20 per month.

• When was the last time you took a good look at your insurance policies? Do you have duplicate or unnecessary coverage? Premiums on many policies can be lowered by increasing deductibles. And don’t forget to shop around for competitive policies. Potential savings: $20 per month.

• Have you fully explored the opportunities for saving online? It’s not just for airline tickets. Are you an avid reader? You can find real bargains on used books and other items by shopping around on the Internet. Potential savings: a lot!

The trick to accomplishing these sorts of cost-cutting measures is taking the time to discover them. Over time, you will see your retirement funds grow at an accelerated rate—without giving up anything you need.


It’s been said that the best time to plant a tree is 30 years ago. This statement couldn’t be truer when it comes to the best time to start investing.

By starting to invest early in your working career, you can position yourself to take the greatest advantage of compound investment returns—or money you make on the money your investments earn. Even a modest savings plan you start when you’re young can provide a much larger nest egg than if you start saving larger amounts later in life.

Look, for example, at what happens when you invest $2,000 at different ages and follow up with additional monthly savings:

• If you start such a program at age 25, saving $100 a month after your initial investment, you’ll accumulate almost $400,000 by the time you’re 65, if your investments earn an 8 percent return annually.

• If you invest $2,000 at the age of 35 and save $200 monthly thereafter, your savings will grow—again, assuming an 8 percent annual return—to only about $322,000 by age 65.

• If, at age 45, you invest $2,000 and then add monthly savings of $300, by the time you reach 65, your investment will have grown to only about $187,738, assuming the same annual 8 percent return.

The bottom line: it’s never too early to start investing. The power of compounding allows you to build up your savings for retirement with less money when you start early.

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