Hope is not a good retirement strategy. Unfortunately, for so many Americans, hope is the only thing they’ve got to hold on to as they face their retirement years.

According to the Employee Benefit Research Institute, 46% of all American workers have less than $10,000 saved for retirement and 29% of all American workers have less than $1,000 saved for retirement.

How can you look at these numbers and not be preoccupied or even paranoid?

Being in our mid 30’s and having two young children, my husband and I often talk about the future, and retirement is definitely on the forefront of our minds.

As we watch so many elderly men and women having to work indefinitely we wonder, what financial decisions can we make, starting TODAY, to help us be prepared for the TOMORROWs?  

Here are few practical ideas to get you on the road to more secure retirement days. These practical steps are meant to help you be proactive and better prepare yourself and your family for the years to come.  

Be DEBT-FREE, Including Mortgage 

Eliminate all of your consumer debt, as well as your mortgage. This will make it much easier for you to retire, even if your retirement years aren’t fully funded.  

Here are few quick “to do’s” to help you ditch your consumer debt:

  • Stop using plastic until you learn responsible use of credit. Anyone using credit cards should aim at paying each monthly balance in full so no interest accrues. There are free cash management tools available to help you do this, following an envelope budgeting system is a great way to help make sure you always have enough cash to pay the bill in full.
  • Eliminate your car debt. Once you pay the car loan off, keep driving the car while making those car payments to yourself. This way, when it’s time to replace your vehicle you’ll have enough cash set aside to purchase one out right. Owning your car out right will also bring your insurance premium down – which is a small additional monthly bonus!
  • Use the “debt snowball” approach to eliminating your consumer debt. Once you pay one card off, roll that money over to the next debt, which will greatly accelerate your payoff. Keep doing this until all of your debts are eliminated.

Now that we’ve dealt with your consumer debt, let’s help you pay that mortgage off!

  • Did you know that adding $25 or $50 to your mortgage payment (make sure the extra funds are assigned to the PRINCIPAL) can shave off 2-4 years and save thousands of dollars worth in interest?  Even if you can’t pay hundreds of dollars extra each month, every little bit will help in getting you closer to owning your home outright.
  • Are you an empty nester or single? Consider renting out rooms, or a basement if you have one, to generate extra income. Apply that income to your mortgage payments and watch your loan melt away!

Are you thinking of reverse mortgage? If so, keep these few things in mind:

  • It should be considered only out of necessity and not as a way to increase your standard of living.
  • The younger you are, the higher relative cost you’ll pay for a reverse mortgage. Avoid taking out a reverse mortgage in your 60’s.
  • Finally, beware of scams that charge thousands of dollars for information you can get free from the Department of Housing and Urban Development (HUD).

Do the Math

Do you know how much you’ll need to retire? Understanding your future financial needs can give you clarity on what you can start doing today.