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If both you and your significant other are eligible for 401(k) plans, both of you should participate. Figure out how much your joint budget will allow, and split your contributions as close to equally as possible so that each of you has a retirement kitty and takes full advantage of any employer match. Don't get yourself into a situation where all the retirement money is in your husband's name, and all your own earnings have gone toward paying for shorter-term expenses.
This is not meant to leave your husband (or partner) out of the loop or to pit the two of you against each other. On the contrary, you should be working as a team. There's no gene that automatically makes a man smarter about money. With the two of you pooling your assets and expertise, you'll be able to build a secure financial future. And a strong financial bond is a strong motivation for sticking together. Statistically, married women do better in retirement because they can draw on their husbands' benefits as well as their own, plus a shared nest egg.
If you and your partner don't think you can afford to put aside the maximum amount in a 401(k), at least contribute enough to take full advantage of the company match. If even that seems a stretch, put aside something, no matter how small the amount. Remember, it's always easier to save when the money is automatically invested before it gets to your pocket. What you don't see you don't miss-and you won't spend.
You say you just don't have any spare cash? Here are a few places to find money you didn't think you had:
- Your Uncle Sam. If you get a tax refund every year, you're paying too much. Put that money in your pocket instead of his by filing a new W-4 form to more closely match the amount withheld from your pay to what you actually owe. Claiming extra W-4 "allowances" will trigger higher take-home pay as soon as your next payday. Stash that extra income in your 401(k).
- Your savings from refinancing. When mortgage interest rates are falling, take advantage by refinancing your home mortgage, and share part of the bounty with your 401(k).
- Your insurance premiums. If you're in good health, a few minutes spent reshopping an old life insurance policy could save you money. You can do it quickly at InsWeb (www.insweb.com).
- Your car insurance. One auto insurer often charges significantly more than another to cover the same driver; you may be able to save hundreds of dollars just by doing some shopping (www.insweb.com can help here, too). Once you've settled on a policy, you can save hundreds more by taking advantage of discounts that you're entitled to if you raise your deductible; consolidate your homeowners insurance with the same company; install a car alarm; and report to the insurer if your teenagers qualify for a good-student discount, or move away from home to attend college.
- Your mortgage insurance. Lenders generally require private mortgage insurance (PMI) if you put down less than 20% when you buy your home. But thanks to brisk house-price appreciation in recent years, your home equity may equal at least 25% of the property's newly appraised value. That's what lenders require between 2 and 5 years after you take out a loan in order for you to shed PMI and save some serious money-$1,000 to $2,000 a year on a $200,000 mortgage. Call your lender to see what you have to do to pull the plug on PMI.
- Your student loans. When interest rates fall, take advantage of your once-in-a-lifetime opportunity to consolidate your loans. Cut your rate further by consolidating with a lender that offers discounts, such as Collegiate Funding Services (888-423-7562; www.cfsloans.com). If payments are automatically withdrawn from your checking account, the lender will cut the interest rate an additional one-fourth of a percentage point. After 5 years of on-time payments, your rate will fall by another point.
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