Candy Crush Could Solve America’s Retirement Problem

Candy Crush Retirement Savings Follow Me on Pinterest Millions of American’s are addicted to Candy Crush including myself at times. The game is so popular that it’s maker, King, just went public and you can now buy their stock! According to CelebrityNetWorth, Candy Crush makes an astounding $3.5 million a day! Mind blown!

So what does Candy Crush and the insane amount of money it makes have anything to do with America’s retirement problem? Everything. If somehow we could get a game as massive as Candy Crush to simply try to help out Americans with their lack of retirement readiness within their highly addictive, cash cow game, America’s retirement problem would shrink dramatically.

How Candy Crush Can Help People With Retirement

Let’s take a couple of ideas and run with them. First off, how many Candy Crush players do you think actually have a decent retirement plan? If they’re anything like the rest of Americans, 57% report having less than $25,000 in household savings and investments (excluding their home and pension benefits) according to Employee Benefit Research Institute. That’s pretty disgusting if you ask me. $25,000 won’t even pay for a single year of a majority of people’s retirement expenses. I’m guessing that you’re planning on being retired for more than 1 year, so something needs to change.

Instead of asking players to like Candy Crush’s Facebook page, King could educate people with quick retirement planning facts. I know it isn’t nearly as exciting, but honestly, who wants to like Candy Crush’s Facebook page anyway? Instead of sending your friends extra lives or extra moves, you could send your friends $1 to fund their retirement accounts if they simply watch a quick 30 second ad about retirement planning.

People Spend A Gross Amount Of Money On Candy Crush

Next, think about the disgusting amounts of money people spend on Candy Crush every day. Personally, I’ve never spent a dime on their game (but I have watched ads to get some extra lives before). Instead of taking 100% of the profits from the ads and people paying for extra lives and special moves (what a horrible financial decision, but that’s for another day), take half of the money and put it into a retirement account for the person.

Better yet, rather than annoying the hell out of three of your friends to give you tickets to move on to the next Candy Crush world, make people increase their 401(k) contributions for each set of worlds. Even if you just increase the percentage by 0.25% per world, people would be contributing more to their 401(k)s than they ever have before. Some might even get an employer match for the first time in their lives.

If Candy Crush wanted to do some good in this world, rather than mindlessly suck away people’s time and money at their computers, iPads and smartphones, they could add an educational aspect to their game that forces people to realize that they’re woefully unprepared for their financial futures. Even just implementing one of these suggestions could help people realize the horrible financial position they’re in and change someone’s life in a very positive way forever.

Stakeholders Want Money – You Should Too

Will King ever take any of this advice? Hell no. They’re out to take as much of your money as possible so they can keep shareholders happy. Maybe you can take a cue from them and realize that you and your family are the largest shareholders in your financial future. Would your future self approve of you wasting money on a silly game when you could be investing for retirement? My future self would never forgive me, especially if I was eating cat food due to my Candy Crush addiction. They didn’t even give me real candy to eat!

Do you play Candy Crush? More importantly, do you save for your retirement? Any other fun ideas King could incorporate into Candy Crush?

Picture by: Sham Hardy Text added by: Lance Cothern

How Much Money Do You Need To Retire?

Money-Needed-To-Retire Follow Me on Pinterest I was lucky enough to meet Todd Tresidder, author of the book How Much Money Do I Need To Retire, a few months ago a conference. I’m really glad I did, because he introduced me to his book exactly at the time I needed it. It helped me figure out what to consider when figuring out how much money I needed to retire.

I’ve been saving at a decent pace for retirement, but I had no clue if I was saving enough or how to plan how much I really needed to save for retirement. I had run some numbers based on the common retirement calculators you find around the internet, but I always felt they didn’t allow me to properly adjust the variables for the situations I wanted to test.

Even though I knew the retirement calculators I found on the web didn’t share the whole story, I was blown away by how much I was really missing when I read Todd’s book for the first time. Todd is a retired hedge fund manager and really knows his stuff. He could have written the book based on his personal knowledge, but instead he took the time to quote some amazing research that really drove his points home.

So what concepts did Todd open my eyes to? Here are just a few things you’ll learn in Todd’s book.

Order of Investment Returns Matter

Every retirement calculator I’ve ever used has you input a number for what you expect your investment returns will be. Some make it a bit more complicated and have a pre and post retirement investment returns number. The problem with these methodologies is, even though your investment returns may average out to that number over the long run, the order and timing of the returns matter much more.

This is especially true as you start drawing down on your retirement funds. If you have big losses as soon as you start withdrawing from your retirement portfolio, you may never recover. Todd does a great job of explaining this in his book and you could be shocked by the how important this concept is.

Two Key Numbers That Will Completely Change Your Retirement Planning

If you haven’t ever read about these two key numbers, then you might be surprised at the significance of them. The first number is percentage of income saved vs percentage of income spent. After a bit of thought, it makes sense that if you save more then you’ll spend less, assuming you don’t go into debt. However, this ratio is capable of determining how many years it will take you to be able to retire. Todd includes a chart in his book and the results could make you rethink your retirement planning.

The second number that will completely change your retirement planning is almost completely outside of your control. The second number is your return on investment minus the inflation rate. This is the real growth of your retirement assets. Inflation is completely out of your control so you’ll need to monitor and adjust for it as you get closer to retirement.

As far as investment return goes, you can invest in riskier or safer assets to change the magnitude of your investment returns, but it is highly unlikely you can actually earn a set investment return each year. These numbers, investment returns and inflation rates, have a huge effect on your retirement because of the effect of compounding. Todd does a great job of explaining this and its impact in his book.

These are just a couple of many things Todd will open your eyes to if you read his book, How Much Money Do I Need To Retire. If you want to pick up a copy, you can order it on Amazon as an eBook or a physical book. If you do buy his book through the links in this post, I will receive a small commission as I am an affiliate of Amazon.com.

Have you started planning for your retirement yet? What challenges have you run into so far?

3 End of The Year Retirement Savings Check Up Questions

saving and retirement Follow Me on Pinterest Saving for retirement is no easy task. We’re quickly approaching the end of another year of our lives and that brings us all one year closer to retiring. That’s why now is a perfect time to check and make sure you’re on track for retirement! Here are a few yearly check up questions than can help you reach your retirement goals.

Are You Where Your Retirement Plan Says You Should Be?

Everyone should have a retirement plan. If you don’t, the first step is getting one! If you are responsible and have a plan, where does it say you should be this year?

There are two answers to the question, you’re either where you should be or you aren’t. The important thing about this question is why the answer is what it is. Are you not where you should be because you aren’t contributing enough money, or was there a recent market downturn?

Depending on how many years away from retirement you are, the answer to this question may require urgent action or waiting out the current downturn.

The key is to know where you are in relation to your goals and why you are where you are. Once you know that, you can formulate a new action plan to get back on track or continue with your retirement savings successes.

You can also check out this resource from Genworth Financial to see if you’re ready for retirement.

Are You Happy With Your Savings Rate?

Your retirement savings rate is my favorite predictor of retirement savings success. The more you save as a percentage of your income, the less income you’ll need in retirement if you keep your lifestyle the same. Unfortunately, savings rate definitely isn’t the only factor in retirement success.

Even if you’re on track with your retirement plan, it may be because you got lucky this year with a major increase in your investment returns. If that is the case, the recent returns may not be what you’ll receive in the future.

You may want to look into increasing your savings rate so that you’ll stay on target with your retirement plan even when markets don’t perform as well in the future as they have in the last couple of years.

Did You Increase Your Contributions With Your Raise?

This is my favorite way to increase my retirement savings rate. Every year when I get a raise, I put half of it toward retirement savings. That means if I get a 2% raise at work this year, I’ll increase my retirement contributions by 1% of my total salary.

Some workplace retirement plans allow you to sign up for an automatic increase program. If your workplace offers this option, then you’ll definitely want to consider signing up.

Whenever processes, such as increasing your retirement savings rate, are automated there is a much more likely chance that the action will happen. Chances are you might not even notice the money missing from your checking account!

If you’re close to retirement (age 50 or older) make sure to check out this resource from US News on 12 important retirement planning deadlines.

Whether you’re close to retirement or it is 40 years away, make sure you ask yourself these retirement savings check up questions every year. You’ll be glad you did!

Do you have any other retirement check up questions you ask yourself? I’d love to learn about how you do your yearly retirement checkup. 

This post was inspired by Genworth Financial. All opinions are 100% my own.

photo by: 401(K) 2013

Why Not Take Your Money Goals & Dream a Little Bigger?

Today we welcome our Tuesday contributor, Catherine Alford!

Caneel Bay: Hawknest Beach Follow Me on Pinterest If there’s anything I’ve learned from packing up my life and moving to a Caribbean island, it’s that we don’t have to wait to dream a little bigger. I think we all have idea of what we hope our future will look like in terms of retirement funds and how much money we should save. Yet, very rarely do we challenge that image and dream a little bigger.

Why Not Now?

There are a select few people in the world who have developed a system of earning passive income whether from their investments or the type of businesses they have. Some of them like Tim Ferriss are young! They’ve found a way to live the life they want without being chained to a desk from 9-5.

Why Not Retire For a Little Bit?

Moving to the Caribbean has shown me that life won’t be over just because I quit a job to do something else for a little while. I think we all just live with this fear that if we leave our jobs to try something else, we’ll screw up our lives.

This couldn’t be further from the truth. When I moved here, I had no idea what I was doing. I left a job with the federal government – a pretty secure job that a lot of people wanted. I was scared, but I did it anyway. I came here with debt and without any job prospects, but eventually, it all worked out because of a little bit of luck and a lot of work ethic.

So, I ask you, why not just save up $30-$50k and live somewhere else for a year? Just retire for a little bit! You never know who you are going to meet, what opportunities will come up, or what you’ll learn along the way. You can always go back to your life as it was before, but after an experience like that, you’ll never be the same (and it is awesome!)

It’s Okay To Be Different

The type of people who dream bigger when it comes to their life and money goals are the type of people who are different. They see a bigger picture than the typical American culture of go to college, get a job, save up, and retire. They have wanderlust and an entrepreneurial spirit. They’re not afraid of trying new things until they get it right, and if they have kids, they see it as a chance to show their kids something unique, rather than worry about uprooting them from their routine.

I’m Not Sure Where I Fall

I’m not sure where I fall on the spectrum. I do know that my experiences over the past two years have shown me that anything is possible and that life doesn’t have to be as cookie cutter as we think it should be. I’m going to go through a lot more changes over the next few months as we move away from the Caribbean and back to the States, except now I won’t be job-hunting. I’ll be working for myself, something I never even considered until I took a step outside of my comfort zone and dreamed a little bigger.

What are some of your dreams? Have you ever wondered how to make them bigger?

photo by: Mike's Birds

Proposal to Limit Retirement Account Balances: Good or Bad?

retirement account limit cap Follow Me on Pinterest This is not a political post but simply poses a question based on current events and a proposal that has been announced.

Recently there has been a proposal that would limit your retirement account balances. There isn’t a ton of information out on the current proposal at the time I wrote this (the official announcement should be out today), but what I know so far is that the proposal would limit retirement accounts to about $3,000,000. According to the report this would allow for a reasonable retirement standard with about $205,000 of income a year.

I had an initial gut reaction and then talked to a friend about the situation and now I feel I can see both sides of the situation. Below I have listed arguments for both sides. Which do you side with?

Go Ahead – Limit Retirement Accounts to a $3,000,000 Balance

Most ordinary, middle-class people will never have retirement accounts that reach $3,000,000. The tax breaks that currently exist for retirement accounts are there to encourage normal people to save for retirement. Limiting them to $3,000,000 shouldn’t affect their motivation at all.

Limiting retirement accounts to $3,000,000 would only get rid of tax breaks for people in the upper-middle class or higher. If they’re able to invest enough to reach a $3,000,000 cap they should easily be able to pay the taxes on any retirement investments beyond that. Currently, the upper classes are taking advantage of these tax breaks and deferring their tax payments to a later date because they can. Would the upper-middle class still invest without these retirement tax breaks? My guess is yes.

Just because retirement accounts are limited to $3,000,000 doesn’t mean that you can’t invest elsewhere. Once you hit the cap you can simply invest in a regular taxable investment account. You could make smart investment decisions in securities that would allow you to avoid taxes in other ways, such as municipal bonds, or simply pay the taxes on the normal type of investments you’d make anyway.

Don’t Touch My Retirement Accounts… They’re MINE!

Don’t you dare touch my retirement accounts! I’ve worked hard to live within my means and save for retirement to live the lifestyle I want later in life. I’ve made smart investment decisions that resulted in returns that exceeded my peers. I’ve maxed out my retirement accounts for years! Don’t punish me for that! I have a feeling a lot of people will react this way…

While $3,000,000 is fine for some people today, for others it simply won’t cut it. If I want to retire in Manhattan then $205,000 a year might not cut it for my family. That’s in today’s dollars at that. If the cap isn’t indexed for inflation what will my son do in 50 years when the buying power of $3,000,000 has significantly eroded due to inflation?

My contributions are already limited so why limit my total balance on top of that? If you want to reduce how much I can save in my accounts, simply lower the future retirement account contribution limits or eligibility requirements and people won’t be able to accumulate the large balances that inspired this proposal.

It isn’t like people are never paying taxes on these large balances. Once they enter retirement and begin withdrawing their retirement funds they must pay taxes. If you’re worried about people using retirement accounts to pass on tax protected money when I die then set up a retirement account tax for when people die.

Setting a cap on my retirement accounts worries me because if they set up this new limit then what else will be changed about my retirement accounts before I retire? Will they determine that I must keep my retirement investments in only a certain type of investment? Will they eliminate retirement vehicles all together and determine I must immediately pay taxes on my full balance? Or even worse… will they tax them like Cyprus?

The Reality of the Situation

In reality, the cap on retirement account balances is just a proposal at this point in time. I don’t think it will even get enacted in today’s gridlocked political environment but it does give us some good food for thought that how we save for our retirement may change in the future.

The retirement tax breaks we currently enjoy aren’t guaranteed. Hopefully the government won’t ever reach into our current accounts, but limiting how we contribute to our accounts in the future is fair game in my opinion. Even if there were no tax breaks I’d still be saving for retirement and I hope you would be too.

Is a $3,000,000 cap too low for some now and for many in the future? Could there be a slippery slope if this is enacted? I think both sides have valid points that should be considered. Which side do you fall on in this debate?

photo by: kenteegardin