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Take these four steps now…Your retired self will thank you!

According to a recent Gallup poll, more than half of Americans say they fear they may not have enough money in retirement. In fact, that’s the country’s number one financial worry.

Instead of living with gnawing uncertainty, take these four steps now to help build your financial confidence:

    1. Make a plan. Sit down with an expert, such as a Certified Financial Planner or a Registered Investment Advisor, to establish long- and short-term goals. What do you want your career to look like in 2 years? 5? 15? Where you do envision living? What kind of lifestyle do you aspire to? What kind of fun can you afford now?  A 2012 Morningstar study found that smart financial planning can add as much as 1.82 percentage points to the annual return on your retirement investments, a difference that could mean significant additional savings for some investors. 

    2. Invest early, consistently and plentifully. A 2012 Blackrock survey found that 36 percent of retirees regret not contributing the maximum amounts to their 401(k) plans. 32 percent say they wish they’d spent less and saved more.

    The impact of beginning retirement plans early is stunning. To illustrate the power of early investing, consider these two scenarios.

    At age 25, Courtney invests $3,000 in a 401(k) each year for 10 years — or a total of $30,000 of her own money. Assuming an average 4 percent annual return, her investment will grow to $121,000 by her 65th birthday, even though she doesn’t contribute another penny.

    Meanwhile, Sarah waits until age 35 to start saving. If she then invests $3,000 each year for 10 years at the same 4 percent return, she will only have $82,000 by age 65 — despite having invested the same $30,000 as Courtney.

    3. Build an emergency fund. Life happens. Death of loved ones, business and career setbacks, economic downturns and health challenges are inevitable parts of life. So are joys, like meeting the love of your life, having babies, and achieving professional success. Create a financial framework for your life that provides security during tough times, as well as the flexibility to seize opportunities and explore your passions as they present themselves. Many financial experts recommend maintaining a cash fund of at least six months’ worth of expenses to keep your family financially buoyant during tough times—and to afford the flexibility to make changes.

    4. Invest in your health. Maintaining a healthy weight and an active lifestyle when you are young doesn’t just increase the chances that you’ll be physically attractive when you’re older. It also means you may have to invest less in health care, freeing you up to spend your retirement savings in other, more pleasurable ways.

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