10 New Year’s Resolutions for Retirement

Here is how to get your retirement plan back on track in 2009

December 23, 2008 RSS Feed Print

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Pay off your mortgage. The benchmark interest rate on a 30-year fixed-rate mortgage has dipped as low as 5.17 percent, according to Freddie Mac. If you're getting a significantly higher return in the stock market (very doubtful right now), it might make sense to keep your mortgage going into retirement. But if you're not an investment wizard or don't want to take the risk, start prepaying your mortgage principal as you approach retirement. "You get an absolutely safe return by paying off your mortgage," Kotlikoff says. "If you have a 7 percent mortgage and 3 percent deflation right now, that means that you are paying 10 percent on your mortgage. Every dollar you pay [down on your mortgage principal] now is giving you a 10 percent real return."

Bump up your contributions. Face it. Without a traditional pension, the only paths to a secure retirement are to save more, cut expenses, or both. That's not easy to do when immediate expenses are demanding a portion of your paycheck before it even clears the bank. If you do manage to get a raise next year, consider diverting it to your retirement account. Says Pond: "The only sure way to create wealth is to save regularly and to regularly increase the amount of money you're saving, or live beneath your means."

Tags:: 401(k),; investing,; retirement

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If I am no longer working with the Federal government and the State, how can I keep my 401K safe, until I
reach the age of 62+?

Karen Perkins of OH 6:24PM February 13, 2009

Dear sir or Madam:
I have often wondered why the government does not have a CD vesting account to gain in the Social Security pay outs and the budget? Why isn't that disclosed part of action to eliminate the deficit?
On CD's the interest gain is higher than on savings accounts and I believe that building your resources in a viable way is extremely important.
This could also build gains in Education on Grants, Scholarships, to give you alittle more for your expenses that a person is bound to incur.

Aida Garcia of CA 1:44PM January 19, 2009

I'd thought about taking it at 62 for some of the reasons above, but then I remembered that once you start taking SS, you're limited on the amount of additional income you can make without penalty. I'm foggy on the details, but at 62, the ceiling was VERY low, a bit better at 65 and I think the ceiling may be lifted if you wait til 70. Somebody else know for sure?

John Eckberg of MN 5:16PM January 13, 2009