I’m all for savings – but this is not the best way.

I read an article in USAToday recently that stated many Americans are saving for retirement by cutting back on spending. The article stated that Baby boomers are willing to cut back their vacations, Gen X-ers will downsize their homes, and the millennials won’t eat out or go to the clubs as often. I have written articles about cooking at home vs. eating out, not putting yourself in a position where you are mortgage poor, or taking a vacation that you cannot pay cash for, but that is only part of the retirement saving story.
Not enough Americans are saving pre-tax to their potential. Many employees only save to the company match. An employee under the age of 50 can contribute up to $19,000 pre-tax, with employees over the age of 50 being able to add an additional $6000. You will either pay Federal income tax, or pay into your retirement fund. My pick is to save to my retirement.
Many of the people polled for the article state that they will just work longer. If you love what you are doing, then working longer is no big deal. Take advantage of the opportunity you have in front of you, save more pre-tax, then look at areas of spending where you might be able to spend a little smarter.

disclosures:http://www.hechteffect.net/?page_id=31

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