Building Wealth

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Wealth building while playing "catch-up." It's never too late to start.

The best way to retire rich is to start saving when you are young. Then keep saving until at least the day you stop working. Get in the habit, and you can continue saving after you stop working.

Few people stick to this strategy. There are too many "emergencies" that seem to emerge. The result is that most people reach their 50's with little saved. While it is never too late to start, you must save more than if you started when you were young.

• Go into a retirement lifestyle mode sooner. If you start planning for retirement in your 40s, you must invest at least 20% of your gross annual income to live comfortably in retirement. If you start later, you need to save even more, or put retirement on hold indefinitely.
• Spend less.
• Downsize your home. With all the new tax rules, you can take all or most of your appreciation out of your home, potentially tax-free. Then you can buy or rent something smaller and add the gain to your retirement savings.
• Put retirement saving ahead of paying college bills. Every financial institution in the country makes college loans. Not one will lend money to pay for retirement. While you would prefer not to load your children up with college debt, sometimes that debt can make a student more vigorous in seeking employment.
• Max out your retirement plan. Utilize 401(k) and 403(b) opportunities.
• Contribute to an IRA. It can make a big difference.
• Look into moonlighting to build your nest egg.

For more information about these and other retirement planning and investment choices, e-mail a Provident Financial Consultant* or call (650) 508-7222 or (800) 656-4096. Provident offers a full range of Investment and Retirement Planning services.