Posts Tagged salary

If You’re 50 and Haven’t Saved A Dime

Posted by Tetyana Matychak in Budget on February 9th, 2010

You’re 50, recently laid off, and now forced to figure out what work you’ll do for the next 15 years or more and how you’ll ever retire.

You’d dreamed of leaving your job at 65, vacationing in Tuscany, taking a trip around the world, or perhaps spending your afternoon on the golf course. But the reality is the economic downturn has tripled the number of unemployed wokers ages 55 to 64 over the past two years, compared with a doubling in the overall unemployment rate.

That means right now, for you, Job Number One is figuring out the next career you’ll embark on. This is the “new retirement” that many Baby Boomers (born between 1946-1964) must now envision.

The rise in job losses, grim prospects for Social Security benefits, and paltry personal savings has created a situation where many Boomers must put off retirement from the workforce because they simply cannot afford it. Even before the recession, the Congressional Budget Office predicted the Social Security Administration would be doling out more money than it took in by 2020, which would deplete the trust fund and cause a severe cut in benefits by 2043. Read the rest of this entry »

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3 ways to invest a $50,000 windfall

Posted by Tetyana Matychak in Investing on January 12th, 2010

Question: I’m 33 years old and seem to live paycheck to paycheck. I’ll be coming into $50,000 soon, however, and I don’t want to blow it. What’s your advice on how I should invest this money once I have it? –Jay, Lowell, Mass.

Answer: I applaud your desire to properly invest your $50,000 windfall. It’s great that you want to do the right thing with it.

But unless you find a way to stop lurching from one payday to the next, I fear that even the best investing strategy in the world isn’t going to improve your long-term financial prospects very much.

Why?

Well, the fact that you don’t mention having any savings already set aside plus your admission that you’re living paycheck to paycheck suggests to me that you don’t have your spending under control. Another way of saying that is that you spend whatever amount is available to you. Read the rest of this entry »

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How much you’ll need in retirement

Posted by Tetyana Matychak in Budget, Favourites on January 8th, 2010

Conventional wisdom says you need 80% of your pre-retirement income. But ensuring a comfortable retirement will take more than just a rule of thumb.

Question: I always heard that you will need 80% or so of your working salary to live on in retirement. But is that a percentage of your gross income or your take-home pay? –Mary Taylor, Chalfont, Pennsylvania

Answer: This rule of thumb has long confused many people who are trying to get a handle on their retirement planning. But the question of how much income you’ll need to live comfortably after calling it a career has taken on a special urgency the last year or so as retirement account balances wilted during the market’s meltdown.

After all, if you earn roughly $100,000 a year and take home, say, $80,000 after taxes, the difference between requiring 80% of your gross income ($80,000) and 80% of your net income after taxes ($64,000) is substantial. Unless you’ve got a pretty sizeable nest egg, the difference between coming up with $80,000 a year (plus inflation increases to maintain purchasing power) and $64,000 can have a significant impact on whether your money can support you the rest of your life. Read the rest of this entry »

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