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5 Mistakes That Are Reducing Your Retirement Savings

By U.S. News & World Report

Retirement may seem a ways off, but you need to prepare yourself for retirement throughout your career. Unfortunately, there are a lot of ways to inadvertently derail yourself from a sound retirement. Here are five mistakes that can decrease the amount you have on hand when you get to retirement:

[Read: Retirement Planning Decisions You Might Later Regret.]

1. Not paying attention to fees. 401(k)s have come under fire in recent years for the fees associated with managing the accounts and the fees on the investment options available within the plan. Funds outside of your 401(k) can have high expense ratios as well. It’s important to check that your returns are not being reduced by outrageous charges. Review the fine print on funds to determine the fees associated with your individual investments. The difference between a fund with fees of 0.76 percent and one with 0.16 percent could be over $40,000 for someone who invested $5,000 per year over a 30-year period. That’s a pretty significant chunk of change.

2. Not taking advantage of company benefits. If your employer offers a 401(k) match, they’re giving you more money. Although it may come with a vesting schedule attached, you should be doing whatever you can to take advantage of the compensation. Typically, this will require you to contribute a certain amount of your base pay up to a pre-set limit, and then your company will match your contribution. For example, your employer might match 50 percent of your personal contributions to your 401(k) up to 8 percent of your salary. This means the company will contribute up to 4 percent of your salary if you contribute 8 percent.

If you’re not contributing enough to take advantage of your employer’s full match, you’re leaving money on the table. In addition, if your company offers a flexible spending account for dependent care or health care, these accounts allow you to contribute money that you’ll be spending in these areas in order to reduce your taxes and pay for expenses. Less taxes means more take home cash flow and more available to save for your future.

[Read: How Your 401(k) Balance Stacks Up.]

3. Not starting now. Compound interest is your money’s best friend. When you invest your money, you earn interest. That interest then begins to earn interest, and so on. The longer this extra interest on your investment has to grow, the more money you can earn over your lifetime. By delaying the age at which you start saving, you’re opting in to play a game of catch up down the road.

If you start stashing away $100 per month and earn 6 percent returns from ages 25 through 65 you’ll have $199,150. If you wait 10 years to start setting aside $100 per month and earn the same 6 percent return from ages 35 through 65 you’ll have $100,451. That’s a large difference for simply beginning sooner.

4. Not increasing your savings rate with pay raises. You’re probably keeping an eye out for income bumps and raises that may come your way. You may even have the money spent before it hits your paycheck. One of the biggest mistakes you can make is not increasing your retirement savings contribution rate when you get these income increases. By leaving your retirement savings rate unchanged after your salary grows, you’re allowing for lifestyle inflation to creep into your budget. Each time you earn a raise or income boost, increase your savings by 1 to 2 percent immediately to ensure you don’t see the extra funds come into your account and become dependent on them.

5. Not knowing where your money is going. It doesn’t matter if you make $50,000 per year or $300,000 per year. Too many people simply don’t know where their money is being spent. Oftentimes we set obscure goals for ourselves or say that something is important to us, but when it comes time to direct our dollars towards those areas, we can’t figure out why there never seems to be enough to get us there.

[Read: How to Become a Millionaire by Retirement.]

You don’t have to sit down with a pencil and paper. You could leverage a technology platform like Mint or You Need a Budget to get a handle on where your money is going so that you can redirect it to the areas that matter most, including saving for your future self.

Mary Beth Storjohann is the author of “Work Your Wealth” and the founder of Workable Wealth.

More from U.S. News

10 Ways to Get Ready for Retirement After Age 50

10 Ways to Make Your 401(k) Balance Grow Faster

10 Costs You Can Eliminate in Retirement

5 Mistakes That Are Reducing Your Retirement Savings 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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