Guidebook Available For Late Savers

Do you wish that you could have saved more money for retirement when you
were younger...but you didn't? The good news is that it's not too late
to take action to achieve financial security in later life. If you are
feeling that you are behind in preparing for retirement, don't despair.
You can still take action to make up for lost time.

Remember that your investment time horizon is the rest of your
life...not your retirement date. This means that, if you are 45 years
old today and live to age 90, you have 45 years to grow your money
through the magic of compound interest. It is important, however, that
your assets be invested aggressively enough to offset the effects of
taxes and inflation. This means considering some stock or growth mutual
funds in your investment mix.

Another piece of good news is that 2001 tax law changes provide
increased opportunities for late savers to save for retirement. If you
are 50 and older, you can contribute additional catch-up amounts to both
an Individual Retirement Account (IRA) and an employer tax-deferred
savings plan (e.g., 401(k), 403(b), or Section 457 plan).

These tax law changes are extremely valuable to late savers and may not
last beyond 2010 if a "sunset" provision in the tax law takes effect.
Therefore, as they say in farming, it's time to "make hay while the sun
shines." According to research by the investment firm T.Rowe Price,
50-year old workers making the maximum contribution allowed each year to
both an IRA and a tax-deferred plan, and earning an 8% average annual
return, could amass \$500,000 by age 65.

So, if you're beating yourself up about what you haven't done to prepare
for retirement, it's time to stop and, instead, take action to create a
bright future. Today is the first day of the rest of your financial life
and it is time to make the most of it.

Compound interest is not retroactive. In other words, it is impossible
to earn interest that was never saved years before. That's the bad news.
The good news is that there are over a dozen different ways for late
savers to make up for lost time. All of these methods basically fall
into one of two basic strategies:

-   Take action before retirement to increase retirement savings

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-   Take action after retirement to decrease the amount of savings
    required

Like many decisions in life, catch-up retirement planning requires
trade-offs. For example, spending less now in order to save more in a
tax-deferred plan or delaying retirement in order to earn additional
retirement benefits and/or save more money. The popular phrase "there's
no such thing as a free lunch" is an appropriate description of the
catch-up retirement planning process because all decisions have their
costs.

Various retirement catch-up strategies can also be combined. Three
examples are: investing more in a 401(k) and moving to a less expensive
location; moonlighting for additional income and delaying retirement;
and investing more aggressively and "downsizing" to a smaller home.

The bottom line is that it's not too late to get started. Catch-up
savers who are just beginning to plan for the future still have many
options. The Cooperative Extension System and the National Endowment For
Financial Education (NEFE) have jointly produced the *Guidebook to
Help Late Savers Prepare For Retirement*. Over a dozen catch-up
strategies are explained in this publication, along with tax law savings
incentives and available resources.

This 52-page publication can be downloaded for free at
[www.nefe.org/latesavers/index.html](http://www.nefe.org/latesavers/index.html).
Print copies are also available from the \_\_\_\_\_\_\_\_\_\_\_
Cooperative Extension of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ County office.
To obtain a copy of the *Guidebook,* send a check for \$\_\_\_, payable
to "\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_," to
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Cooperative
Extension,
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(address)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.
For additional information about the *Guidebook to Help Late Savers
Prepare For Retirement,* call \_\_\_-\_\_\_\_ weekdays during business
hours.

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