WHICH SECTION DOES THE EDITOR WANT US TO IGNORE?:

Even late-starters can retire with a nest egg (Eileen Alt Powell, 3/07/05, ASSOCIATED PRESS)

The main reason that Americans, especially baby boomers, haven't put enough away for retirement is that they've been living beyond their means, said financial planner Alan Havir, who works at Abalos & Associates in Phoenix.

"If you're 45 or 50, and you haven't saved or you haven't saved enough, you have to seriously look at reducing your lifestyle," he said. "You have to spend less than you earn. You have to stop spending your retirement money today and start to save and save and save."

That's tough advice to follow, but Havir believes people can do it if they take the time to imagine the life they want in retirement. That should help motivate them to put the money in place to get them there.

"You have to ask, 'What do I really, truly want?"' Havir said. "Then you have to jettison what doesn't take you there, from your life today and from your life tomorrow." [...]

Financial adviser David Bach also advocates that people try to break up the big task of saving for retirement into manageable portions.

Bach, author of the book "Start Late, Finish Rich," says there are strategies to build a retirement cushion, regardless of the age people start.

For example, can you wring just $10 a day out of your budget to set aside in a savings account, perhaps by cutting out expensive coffees or carrying your lunch or reducing cell phone use? That seemingly small amount can build to more than $227,000 in 20 years, assuming a 10 percent annual return, Bach calculates. Bump the savings up to $15 a day, and the results grow to nearly $342,000.

Another strategy is to build up your 401(k) retirement account or Individual Retirement Account, both of which growth tax-deferred.

Bach recommends that workers aim at putting the equivalent of one hour a day of their income into a retirement account. If you earn $50,000 a year, that works out to about $1,000 a week or $25 an hour, so your goal should be setting aside $25 a day in retirement savings.

"That may seem overwhelming, but it's like exercising -- you don't run a marathon your first day out," Bach said. "You can start by saving the equivalent of a half hour's pay a day, then building up to three-quarters of an hour, then an hour."

Bach also suggests people keep in mind that the ability to earn money does not end at age 65.

Ever get the feeling that the folks who write for the financial/business section, and actually understand compound interest, are from a different planet, nevermind a different paper, than the folks who write politics and insist the SS privatization numbers don't add up?

Posted by Orrin Judd at March 7, 2005 12:00 PM