Money. Purpose. Joy.

In this Issue:

• Another Voice in the Retirement Warnings Wilderness
• Avoiding Retirement Killers
• Love is Priceless, but Not the Wedding
• Scarier Than Public Speaking

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Another Voice in the Retirement Warnings Wilderness

While there’s no shortage of studies and warnings about our lack of retirement preparedness, now there’s another. As reported in the Wall Street Journal on 6/6, new analysis from the Center for Retirement Research at Boston College indicates that nearly half of all working-age families may not be able to maintain their current standard of living in retirement. The Center pointed to something of a perfect storm: Longer life spans, the disappearance of traditional pensions, and insufficient savings.

Matt’s View:

The Center noted that workers born between 1965 and 1972, so-called “Gen Xers,” are doing the least to prepare. While it may be tough to find money to put toward retirement during a life stage that often includes children at home, younger workers have the best opportunity to take full advantage of the power of compound interest. The key is to start saving now.

Does your employer offer a 401(k) plan? Call your benefits department today to find out when you can join or increase your contributions. If a 401(k) isn’t an option, open or add to an IRA. Information about requirements, contribution levels and more can be found on brokerage house web sites such as Fidelity , Vanguard , Charles Schwab and others. Are you self-employed? SmartMoney provides a great summary of the options .

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Avoiding Retirement Killers

There are all sorts of ways to sabotage a retirement. Not saving enough is certainly at the top of the list. But the Motley Fool posted several others on 5/26. Among them: Cashing in your 401(k) plan when switching jobs (an astounding 45% of job switchers do so) and not knowing how much to save (only 42% of workers have done a retirement needs calculation).

Matt’s View:

Instead of cashing in a 401(k) when you leave a job, triggering income taxes and a 10% penalty for those under 59 and a half, roll the money into another retirement account such as an IRA. As for not knowing how much to save, lots of free online calculators are available. Among the better ones are those from by T. Rowe Price, which offers a fairly sophisticated Retirement Income Calculator and a simplified Retirement Planning Worksheet .

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Love is Priceless, but Not the Wedding

When the Beatles sang, “Can’t buy me love,” perhaps they hadn’t considered the cost of a wedding. According to a story in Kiplinger’s May issue, the average wedding now totals nearly $28,000. The story also noted that today just 30% of brides’ parents pay for their entire wedding. To save money, the article suggested holding your wedding “off season” (non-summer months); looking for creative alternatives to pricey receptions (know anyone with an especially nice backyard?); and buying a wedding dress online (a dress bought via eBay averages $267 versus a national average of $922).

Matt’s View:

After the wedding, I encourage couples to avoid the following marital money management mistakes: Keeping separate accounts (it promotes a “mine/yours” approach whereas combined accounts promote an “ours” approach); building a lifestyle that requires two incomes (a one-income lifestyle provides flexibility should one spouse want to stay home with kids, provides a stress-reducing safety net in case one person loses their job, and enables couples to do something very radical: save!); and buying too much house (if neither person owns a home prior to the marriage, I encourage newly married couples to wait 6-12 months before buying. It allows time to focus on getting the marriage off to a good start without the many distractions of home ownership).

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Scarier Than Public Speaking

You’ve probably heard that most people fear speaking in public even more than death. Well, Money magazine reports that paying for college is what parents of school age children fear the most. To help alleviate that fear, the article recommends one relatively painless action step. Open accounts with Upromise (http://www.upromise.com/) and/or Littlegrad (http://www.littlegrad.com/). Both put a percentage of your day-to-day credit card or debit card spending into a “529” college savings account.

Matt’s View:

While you certainly won’t pay for four years of college this way, hey, if it pays for a semester’s worth of pizzas, it’s found money. While it requires a little bit of effort (registering your credit or debt cards on the sites and, in the case of Upromise, making purchases through the site’s portal), this is about as painless as building savings gets.

On a related note, a reader commented on the last issue of Matt About Money, wondering whether a 529 plan is such a good idea for college funding since the plan offered by his state has not been performing very well. I’m still a believer in 529 plans, but remember, you don’t need to stick to the one offered by your state. A great resource for investigating the plans offered by each state is www.savingforcollege.com . You’ll have to determine the trade offs. With an in-state plan you may be eligible for a state tax break. However, by going out of state you may find a plan with lower fees, more investment options, and a better track record. This site helps you wade through the various offerings and even rates each program.

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