6 Tools to Supercharge Retirement Savings

Dollar bills through a laptop screen
Brian Jackson/AlamyOnline investment management tools can motivate you to control spending and save more.
By Robert Berger

Saving for retirement certainly isn't easy. A recent study by the Transamerica Center for Retirement Studies found that only 18 percent of those surveyed expect to be better off in retirement. While no tool can fully automate retirement planning, there are tools that can offer a lot of help. These six tools can help you save, plan and prepare for your golden years:

1. Personal Capital. This free tool is the Cadillac of investment tracking tools. Not only does it track investment performance, but it also shows you your asset allocation across all investment accounts, including taxable and tax-advantaged accounts. For those with a 401(k), Personal Capital also shows you how the costs of the retirement account affect your ability to retire. The graphs and charts make understanding all of your investments very easy.

2. Money Ratios. Popularized by a book of the same name by Charles Farrell, Money Ratios offers an easy way to determine if you are saving enough for retirement. The simple ratios can show you if your saving rate is sufficient, and if your current nest egg, given your age and income, has you on a secure path to retirement. In addition, the book provides ratios to help you evaluate your debt, mortgage and other important financial planning issues.

3. You Need a Budget. At the heart of both saving for retirement and making your nest egg last in retirement is money management. YNAB is an excellent budgeting tool. Having used it for years, it's helped me actually stick to a budget. In addition to the tool, YNAB offers an excellent series of videos, articles and an active user forum to help you use its tools and better manage your money.

4. Social Security calculator. The Social Security Administration offers a free calculator that helps you estimate the Social Security benefits you will receive in retirement. In addition, you can get a statement from SSA with a breakdown of your contributions and expected future benefit. The SSA also offers life expectancy and retirement age calculators.

5. Retirement calculators. There are a lot of free retirement calculators available online. Some are very simple, while others require more data and undertake a more complex evaluation. One of the most thorough options is the Flexible Retirement Planner. But be prepared to spend some time with the calculator. For example, you can create "what if" scenarios to evaluate how certain life events may affect your retirement readiness. You can also perform a sensitivity analysis to determine which factors will have the greatest impact on your retirement.

6. A credit card. Yes, even the credit card industry has waded into the retirement planning industry. One of my favorite cash back credit cards is the Fidelity Investment Rewards American Express. The card pays 2 percent cash back on all purchases and deposits the rewards in your Fidelity account. It's one of the most rewarding credit cards available today. Now if only other investment firms would join the party.

Rob Berger is an attorney and founder of the popular personal finance and investing blog, doughroller.net. He is also the editor of the Dough Roller Weekly Newsletter, a free newsletter covering all aspects of personal finance and investing, and the Dough Roller Money Podcast.

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6 Tools to Supercharge Retirement Savings
Eliminating your mortgage is one of the best ways to make retirement more affordable because it removes a sizable monthly bill. While you'll still have to pay taxes and maintenance costs for your home, those expenses are likely to be a fraction of your mortgage payments.
Once your children are independent, you will likely no longer need a several-bedroom house in a good school district with a large yard that can be expensive to maintain. Consider downsizing to a smaller home in a less-expensive neighborhood, and add the proceeds of the sale to your nest egg.
Where you live plays a big role in how much you pay for food, taxes and a variety of other services. Moving to an area where the cost of living is significantly less could allow you to spend down your retirement savings more slowly.
If you and your spouse commuted to separate places each day, it is likely that you each needed a car. In retirement, you might be able to get by with one car, thus eliminating the insurance, gas and maintenance costs of the second vehicle. In walkable communities with good public transportation, you may even be able to get by without a car in retirement.
In retirement, income tax will be due on withdrawals from traditional 401(k) and individual retirement accounts, but you can space out your withdrawals to avoid a hefty tax bill in a single year. Prepaying income tax on some of your retirement savings using a Roth IRA or Roth 401(k) allows you to avoid a big tax bill in retirement.
Investing in high-cost funds reduces your return. Minimizing investment costs is especially important for retirees who are living off income from their portfolio. In this case, selecting the lowest-cost funds that meet your investment needs translates to more money in your pocket.
There are significant penalties if you withdraw money from your retirement account too soon or too late. There is also a reduction in benefits if you sign up for Social Security early, and a late enrollment penalty if you delay signing up for Medicare Parts B and D. Pay attention to important retirement deadlines to avoid paying more than you need to.
Health care is likely to be one of the biggest and least predictable costs you will face in retirement. But there are some things you can do to control your health costs. Consider purchasing a supplemental policy to Medicare to fill in some of the gaps and cost-sharing requirements traditional Medicare doesn't cover. Also, shop for a new Medicare Part D plan every year to make sure you are getting coverage for your medications at the best price.
Retirees have the luxury of being able to travel whenever they want. Traveling is often less expensive if you avoid major holidays and school breaks, and most tourist destinations will also be less crowded.
One of the major perks of growing older is getting discounts at movies, museums and restaurants. While some senior discounts are well-publicized and open to everyone old enough to have an AARP card, others are available only to those who ask. A little research can add up to big savings if you’re willing to admit your age.
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