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6 Painless Ways to Save for Retirement

By U.S. News & World Report

Everyone knows you’re supposed to save money for retirement. So how come, according to the Employee Benefit Research Institute, over half of workers admit they have less than $25,000 in savings?

It’s difficult to save money, especially if you’re raising a family on anything less than the median household income, which according to the U.S. Census Bureau is about $54,000 per year. The truth is that $54,000 doesn’t go a long way in today’s economy. After taxes and Social Security are taken out, then you face the costs of food, energy, housing, insurance, education and healthcare.

For many of us, the only way to save money is to put the process on automatic pilot, so you don’t have to reach into your wallet and pull out the money yourself. Here are six ways to save for retirement, even if you can’t stand the pain of doing it on your own.

1. Sign up for the 401(k) plan at work. All it takes is a one-time visit to your human resources department, where you’ll fill out a few forms. Your company will take the money out of your paycheck automatically before you see it or have a chance to spend it. If your company matches 401(k) contributions, try your hardest to sign up for at least the amount the company will match. It’s worth the current financial sacrifice to get the free money later on. Save as much as you can. Try for 5 percent of your salary, or more if you can afford it. But be realistic. Even if you save 2 percent, you’re doing better than most people.

2. Put your tax refund into an IRA. If you don’t work for a large company offering a 401(k) plan, life gets more difficult. That’s what an IRA is for. Set one up and try to fund it on a regular basis. But even if you do have a 401(k) account, there’s no harm in also starting an IRA to give you an extra financial cushion in retirement. In addition to whatever regular funding you make, try this strategy: If you get a bonus, inheritance or tax refund from the IRS, spend half of it, then put the other half in your IRA.

3. Invest in a low-cost index mutual fund. Unless you were a math major in college or studied finance under someone like Warren Buffett, you have no business trying to pick winning stocks from the thousands of offerings on the stock exchanges. Most people with full-time jobs and families don’t have time for that kind of exacting work. The painless way to invest — in your 401(k) plan, IRA or any other savings vehicle — is to choose a broad-based index mutual fund with no up-front fee and low annual expenses (below 0.5 percent). The bonus: Low-cost index funds are not only the easiest investments, they are often the best.

4. Buy a house and pay your mortgage. Real estate got a bad name in the aftermath of the great recession as some high-flying markets sank as much as 50 percent. But one temporary exception does not change decades of good results. A time-tested method for most of us to build capital is to buy a home, live in it for many years, pay our mortgage faithfully and then eventually sell it for a tax-advantaged profit.

5. Pay off your loans. A sure way to torpedo your retirement is to carry too much debt, which almost always costs more than what you can earn on your savings. Pay off credit card debt first, then any other consumer debt, including education loans, unless you have some kind of preferred rate (like a promotional auto loan) that only costs 1 or 2 percent a year. Finally, if all your other debts are paid, and your retirement plans are fully funded, you can start making extra payments to satisfy your mortgage early.

6. Hire an accountant to do your taxes. Theoretically, we shouldn’t have to pay an expert just to fulfill this mandatory duty of citizenship. But the fact is, for most people the world of finance has become so complicated that hiring someone to do your taxes will probably save you money in the long run. It will certainly save you the irritation of figuring out the tax forms, and might lower your stress levels to the point where you’ll live long enough to enjoy the retirement savings you’ve been accumulating over the years.

Tom Sightings is the author of “You Only Retire Once” and blogs at Sightings at 60.

More from U.S. News

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10 Reasons to Save for Retirement in a Roth IRA

6 Painless Ways to Save for Retirement originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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