Doing it all: Planning for retirement while taking on other financial goals

Workers can save for retirement while tackling other financial goals such as paying off college debt or saving money for a down payment on a house.

Believe it or not, you can save for retirement and pay your college debt and save money to buy a house or accomplish other financial goals.

Such a strategy, in fact, actually will make you wealthier over the long haul as you approach retirement.

“It’s not hopeless. We all have to learn the opportunities to save in a tax-advantaged, tax-deferred and tax-free way,” said John Carter, president of retirement plans for Nationwide.

A survey by the Columbus insurance company found that the average age at which workers begin to save for retirement is 31.

While 35 years or so may seem like a long time to save for retirement, imagine the difference if workers began saving a decade earlier.

Under one of Nationwide’s scenarios, workers paying $500 more a month — $110 more than the minimum — to retire a 10-year, $35,000 student loan with a 6 percent interest rate could save more for retirement than the amount of interest saved on the loan.

Saving for a house? Reducing the amount of money a consumer is saving for a down payment and putting that difference into a retirement plan could delay hitting the goal for the down payment, but it would pay off in the retirement plan.

It’s a mistake to focus on only one financial goal at a time, especially when it comes to saving for retirement, said Greg McBride, Bankrate.com’s chief financial analyst.

“Thinking in a linear fashion is costing yourself valuable years in retirement contributions,” he said.

McBride recommends that workers employ automatic pilot, so they never see the money that goes into a retirement plan, an emergency account and student-loan or other debt obligations.

Nationwide’s research found three main reasons consumers don’t save what they want in retirement: not enough money, daily expenses and debt.

That research also found consumers know that the earlier they start saving for retirement, the better. About a third of those surveyed said workers should start saving for retirement between the ages of 25 and 30, and 42 percent said they should start sooner, between 18 and 24.

Starting to save at the age of 23 for retirement rather than 31 can be substantial when it comes to retirement planning.

“Time is your greatest ally,” McBride said. “You’ve got to get started early. Every dollar you put away in your 20s can be worth $15 when you’re in you’re 70s.”

John Griffith, 27, a marketing specialist at Nationwide who lives in the Short North, realized after he graduated from college that he wanted to approach his financial goals with the notion of tackling them all at once.

“I wanted to make a dent in all of them at one time. I didn’t just want to be focused on student loans or saving for retirement. I wanted a more holistic approach,” he said.

He said such an approach required a tough look at his finances and how much he could realistically put away for his goals.

“I can save for retirement while paying my student loans. It’s definitely doable,” he said.

Griffith uses automatic payroll deductions to save for retirement and smartphone apps to track debt and how he’s doing for retirement.

“I get a kick watching my net wealth grow,” he said.

The payoff of such an approach can be extraordinary.

A worker at the age of 23 putting away $100 a month in an account returning 6 percent a year would have nearly another $90,000 saved by retirement; at $200 a month, the difference would be about $180,000.

“The biggest financial regret Americans have is they don’t start saving for retirement early enough and that regret only increases with age,” McBride said.

mawilliams@dispatch.com

@BizMarkWilliams

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