2003 November | Wheatworks Blog: Financial Matters

Can You Afford Retirement?

11/17/2003, 8:03 am

Can You Afford Retirement?

It’s a scary fact: Americans are no longer saving for retirement. A decade ago we saved 8.7 percent of our incomes. The Commerce Department reported the amount we save fell to 1.6 percent in 2001 … not even 2 cents of a dollar!

And those who do save, do so without enthusiasm. Most employees who participate in a 401(k) plan have a balance in the plan worth only half of a year’s salary. More than 25 percent of participants have less than $5,000 in their 401(k).

The odd thing is, many of us say we’re looking forward to retirement. But unless we significantly change our saving behavior, anticipating a happy retirement is just wishful thinking.

If you haven’t considered funding your retirement, do it now!

Here’s a couple of tips for getting get you moving in a good direction.

1. Check your economic pulse and give yourself an honest retirement checkup. The questions are simple: Do you have anything saved for retirement? How much? How soon will you retire? How long do you expect to live after you retire? Will you have enough to fund your needs between your retirement date and your demise?

2. Get a new appreciation for reality. Refuse to expect a surge in the market to provide free money. The market is NOT your fairy godmother. What you will have when you retire depends on what you do before you retire.

3. Don’t expect to live on Social Security. If it’s available for you when you retire, it will be the gravy on your meat. If it’s not there for you, you will still want that meat.

4. Save. Save. Save. Put as much as you can into a retirement plan at work (at a minimum, get the employer match). You can save $11,000 a year in your 401(k), 403(b) or 457 retirement plan. If you’re over fifty you can stow away another $1,000 per year. You can also put $3,000 a year in a Roth or regular IRA. Save everything you can.

5. Get good advice from a qualified financial planner. But don’t take the advice at face value. Think about what you hear before you act.

6. Scare yourself into action. Visit our MoneyToys.com site and use the online Future Value of Savings Calculator to see how much money you may have when you retire.

For example, if you save $500 a month for 20 years and earn 8% on it, you have only $294,510 in your retirement account. Do the same thing for 30 years and you have $745,180. It’s easy to see why they say, “time is money”!

(If you wish to use a more advanced savings calculator, download a fully functional, evaluation version of Wheatworks’ Future Value of Savings Calculator for Windows computers.)

7. Start now! It’s your future.

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Loan Spread Calculator Pro Updated to 2.5.10

11/11/2003, 7:57 am

Compare 77 loans at once with Loan Spread Calculator Pro, a comprehensive loan calculator designed for Windows 95, 98, ME, NT4, 2000, XP Home and XP Professional systems, has been updated to version 2.5.10. This minor update is free for registered users.

Loan Spread Calculator Pro may be purchased for $29.95 online at wheatworks.com. Site licenses and volume discounts are also available which can save you money if you need more than one copy.

View a screen shot of this time value of money calculator or download the free, fully-functional evaluation version and try it before you buy.

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Tips for Homebuyers

11/7/2003, 8:04 pm

Tips for Home Buyers

Unless you have a contract with a real estate agent who is acting as your agent, the real estate agent showing the house is working for the home owner. Don’t ever forget this! It’s your job to look after your interests, not the homeowner’s agent. He or she is taking care of the seller.

As tempting as it may be and even though you may qualify for a big loan, avoid buying more home than you can comfortably afford.

Even in the best of circumstances, buying a new home is stressful. It’s a major decision that will impact you in practical, financial and emotional ways. Pay attention to your stress level and realize the tension is normal.

You really should shop around! If you borrow $100,000 at 8% for 30 years and you will pay $264,155.25 over the term of the loan. But at 7% you will pay only $239,508.90 … a savings of $24,646.35! Shop around for the best rate!

Check up on yourself! Obtain a copy of your credit report 3 or 4 months before you apply for a mortgage. This will allow you time to close unused accounts and correct errors in your credit report.

Is your paperwork in order? Home Buyer’s Calculator Suite provides a Documentation Checklist that will guide you as you gather the documents you will likely need when applying for a loan. You’ll find the Documentation Checklist on the Forms menu and the main screen.

“Prequalified” is not “preapproved”. Preapproved is a commitment. When you have been preapproved by your lender you have a commitment from that lender to loan you X amount of money at Y% interest rate.

It’s a good idea to close unused credit accounts. Home Buyer’s Calculator Suite includes sample text you may use to close your unused credit accounts.

Before you grow too excited about a particular house, you should explore the entire neighborhood and surrounding area. You may find things nearby that you don’t wish to live near.

Having a thorough home inspection performed is a great idea. Who wants to learn about the old, rusty pipe in the attic by stepping on soggy carpet one morning?! And go through the house with your home inspector.

Get a thorough septic system checkup! In some areas the health inspector is required to check the septic tank only. Make sure he or she also checks the system’s field lines. A good septic tank is useless without good field lines.

Beauty is only skin deep. While appearance is important, remember that a good coat of paint can cover more than a good wall surface. Don’t be misled by appearance.

VA loans are guaranteed by the Department of Veterans Affairs and may be used by military veterans for single-family dwellings. If you are a United States military veteran, check out this benefit!

Protect yourself! Never sign a document you do not understand! Your signature is binding. Ask questions … any you wish! Do not allow yourself to be cornered, coerced, or intimidated into signing any paperwork you don’t want to sign.

These are just a few of the tips for home buyers available in Home Buyer’s Calculator Suite. Check it out of you’re in the market for a new home. It’s a collection of real estate calculators designed to let you “play with the numbers” related to your real estate transaction. A fully functional evaluation version is available from Wheatworks.com.

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