Quick & Easy Retirement Plans

There are quick and easy plans for retirement.money money image by Valentin Mosichev from Fotolia.com

The recession, its aftermath of federal stimulus money and bailouts made many high-end financial planners very nervous. When financial planners and Wall Street get nervous, everyday investors should be even more so. Financial planners are losing their commissions; you're using your retirement nest egg. While the outlook is "stormy, with high risks of inflation" for the foreseeable future, there are some quick and easy plans you can make for retirement.

Plan to Work Longer

First, Social Security isn't a trust fund with a lock box. It's a large pile of IOUs accumulated since the mid 1960s. Right now, Social Security takes in marginally more than it pays out. Eventually, that will change as baby boomers retire in large numbers. Saving Social Security largely means the eligibility age will have to go up. That's not just a requirement for Social Security; it will be a need for other retirement plans as well. Indeed, if current trends are any indication, the vast majority of people who "retire," will retire to running a small business for them to keep busy and active--and make extra money.

America has a national savings rate that's negative. This means most Americans have a debt rate, not a savings rate. That will have to change, and fast. For your own personal security, figure out how much you make in a year, and live off 90 percent of that. Use the remaining 10 percent to buy down your highest interest rate debts. With those paid off, put the 10 percent into a savings account at a local bank, and then buy certificates of deposit. Never pay interest on something that doesn't appreciate in value (like your home) if you can avoid it. It's better to save money to buy something than to buy something and pay it off later with interest.

If you're eligible for a 401(k) plan (or have one already and watched it lose 70 percent of its value in the last 18 months), it's still worth it to contribute to it at the maximum amount that gets employer matching. Think of it like this: every pre-tax dollar you contribute takes about 70 cents out of your paycheck, and gets an additional dollar added by your employer. In effect, every 70 cents you don't see in your paycheck turns into $2 in the 401(k). That's very nearly tripling your money from the get go. Even if the stock market is terrible, that's too good of a deal to pass up.