Lifestyles of the Personal Finance-Savvy: 8 Ways Retirees Can Spend Their 401K

The average age of retirement in the United States is 62 years old, with retirement typically lasting about 18 years. That’s a long time to be living on money that’s been squirreled away via savings, investments, and a 401K. Fortunately, if you’ve been smart with your money and planned ahead for retirement, you can live comfortably and enjoy your golden years by spending some of your savings on fun activities.

Below we highlight 8 things retirees can spend part of their savings on, and illustrate how much money would have to be put into a 401K to afford such luxuries. Each amount was based on a tax rate of 28% and stock market returns of 12%, with a 50% employer match program and 30 years until retirement.

If you need a refresher on how a 401K plan works and why it’s the most fiscally sound option when saving for retirement, check out this video to learn why it’s ideal for maximum savings potential.

Caribbean Cruise

What better way to enjoy retirement than to take a relaxing two week cruise through the Caribbean? There’s no better reward for decades of hard work than crystal blue waters, sandy beaches, warm temperatures and piña coladas.

Sample cost: $3,500
401K savings: $13/year, or about $1/month

European Vacation

A two-month trek through Europe would be quite the adventure. A retired couple could visit multiple cities, take in multiple historic attractions, sample great food and wine, and bask in the diverse European culture.

Sample cost: $10,000
401K savings: $38/year, or about $3/month

Time Share

Time shares are handy options for couples who enjoy traveling but don’t want to be bogged down with a vacation home in a set location. They can visit numerous cities without worrying about hotel rates or fluctuating fees.

Sample cost: $20,000
401K savings: $77/year, or about $6/month

Cabin Cruiser Boat

Take to the seas in a roomy, comfortable cabin cruiser. The cost of a boat varies depending on its size, engine type, age and condition, but once you’re out on the water enjoying retirement, you’ll probably think the purchase was well worth it.

Sample cost: $50,000
401K savings: $192/year, or about $16/month

Luxury Car

A lot of people splurge on their dream car once they’ve retired. Whether they’re in the market for a flashy sports car or are looking to buy a luxury sedan, their purchase will probably cost significantly more than your standard Chevy Aveo.

Sample cost: $70,000
401K savings: $269/year, or about $22/month

Class-A RV

Many retired people buy RVs so they can take to the road and explore the US. There are several different types of RVs, with the class-A RV being the largest and most expensive, but we’re betting that most retirees would justify the cost so they can cruise from coast to coast in style and be comfortable.

Sample cost: $90,000
401K savings: $345/year, or about $29/month

Home Remodel

Many retirees finally have extra time for all of those home projects that have added up throughout the years. Some people may opt for a new kitchen, while others splurge for an addition to the house or a revamped master bedroom suite. Whatever the project, it’ll likely cost a pretty penny.

Sample cost: $100,000 for a new kitchen, bathroom and master suite
401K savings: $384/year, or about $32/month

Vacation Home

It’s common for retirees to purchase a vacation home in a warm locale, to be close to family, or simply because they like visiting a particular destination. Vacation homes obviously range depending on the size and type of home and its location, but for most retired people it’s a necessary cost that they’ll appreciate for the rest of their lives.

Sample cost: $300,000
401K savings: $1,151/year, or about $96/month

Sources
1. http://www.budgettravel.com/bt-dyn/content/article/2005/06/04/AR2005060400460.html
2. http://www.rvinsiderguide.com/html/rvinsiderguide/articles/average-prices-of-rv.html
3. http://www.costhelper.com/cost/leisure/caribbean-cruise.html
4. http://cgi.money.cnn.com/tools/renovation/renovation.html
5. http://answers.yahoo.com/question/index?qid=20081025105647AAQhdnU
6. http://www.washingtontimes.com/news/2009/apr/13/rising-costs-of-health-care-hamper-retirees/

Make Saving Money Fun

Stanford University Announces Global Innovation Tournament 2009 Mystery Challenge: “Make Saving Money Fun”

Global Entrepreneurship Week tournament gives students around the world just eight days to develop innovative solutions and have impact

Credit: amagill

“Make Saving Money Fun.” That’s the task that thousands of students of all ages from at least 51 countries will tackle in the next week in response to a challenge unveiled yesterday by the Stanford Technology Ventures Program. And the students’ actions just may help people find a way through the global recession. Read More »

Colbert’s Counsel: Earn More with a ‘Stache

Stephen Colbert, host of The Colbert Report, advised all able Americans to get a raise by growing a mustache earlier this week, taking the advice of Quicken and American Mustache Institute’s study. He cited the study which said that Mustached Americans earn 8.2 percent more on average than those with beards and 4.3 percent more than the clean-shaven. Read More »

What would you do with a month’s free rent?

After seeing everyone’s interest in our Quicken Free Rent Sweepstakes happening on Twitter, we decided to hit the streets of San Francisco and ask, “What would you do with a month’s free rent?” Read More »

The Ultimate Performance Enhancer

*This post is by guest author Dr. Abraham Jonas Froman.

For sports fans, one of the saddest side notes of the new millennium has been performance enhancing drug scandals in some of our favorite pastimes like baseball, football, and dwarf square dancing. Read More »

Yippee! Quicken Free Rent Sweepstakes

Wouldn’t free rent be nice? Now more than ever, people need a financial break, with the holiday season approaching, shopping carts filling up fast and travel reservations coming soon. A free month of rent would really help kick-start your New Year’s resolution to take better care of your finances or get out of debt, right? In two steps, you can be on your way to possible free rent action this holiday season.

1. Follow @Quicken on Twitter
2. Enter the contest here: www.quickenfreerent.com

Join us in the pursuit of a better money year in 2010 by starting now with a month of free rent.
We announced the Quicken Free Rent Twitter Sweepstakes this week when as Quicken for Windows 2010 became available for consumers who need an easy and fast way to manage their money. One winner will have their December 2009 rent paid up to a maximum of $2,500! The sweepstakes begins today at http://www.quickenfreerent.com. Full contest rules, terms and conditions, and entry methods are available there. Good luck! Follow @Quicken for the latest updates on how to win FREE RENT.

The Quicken Mustache

*This post is by guest author Dr. Abraham Jonas Froman.

For readers of the Quicken blog, you’ve become conditioned to posts about college tuition, investing, taxes, and savings. But as you may have gathered in recent weeks, something on this blog has changed. For certain, it’s gotten hairier. Read More »

Finalists Announced for 2009 "Robert Goulet Memorial Mustached American of The Year"

The American Mustache Institute (AMI) today announced finalists and opened voting for the “Robert Goulet Memorial Mustached American of the Year” award presented by Quicken. The award, recognizing the person either best representing or contributing to the Mustached American community over the past year, will be announced in St. Louis on Oct. 30 at ‘Stache Bash 2009 featuring John Oates, a benefit for Challenger Baseball. Read More »

How Much Does a Minimum Credit Card Payment Actually Cost You?

Minimum credit card payments are designed to make you feel like you’re barely paying anything at all, but the truth is that paying just the minimum may end up costing you hundreds of dollars more for your purchase than you originally paid. To illustrate the impact minimum payments can have on you and your wallet, here is a video explaining the basics of APRs and how they’re calculated. We also looked at the minimum payments of two hypothetical credit card charges, one on an average APR credit card and the other on a high APR credit card.

Buying an iPhone with an Average APR Credit Card

Let’s say you want to buy an iPhone and you have a credit card with a 12.99% APR. You purchase a 16 gig iPhone 3GS, which retails for $199.99. You also add on a case of screen protectors for $14.99 and a protective case for $19.99. The total purchase amount including 6.5% sales tax comes to $250.24.

How Much Does It Actually Cost?

A few weeks later, you receive your credit card bill in the mail. Your minimum payment for your purchases is $10 a month and your credit card has a 3% minimum payment percentage. It will take 30 payments to clear your credit card balance, which amounts to one payment a month for 2.5 years, costing you $43 in interest (almost 1/6th the cost of the original balance). Your iPhone and its accessories ended up costing you $293.24.

What’s the Interest Worth?

$43 in interest =
Nearly half a month’s iPhone bill

or
17 paid iPhone apps (with an average app costing $2.50)

Buying a Playstation 3 with a High APR Credit Card

You head to the store and pick up a Playstation 3, which retails for $299.99, as well as an extra controller ($54.99), a game ($59.99), a Blu-Ray remote ($24.99) an HDMI cable ($59.99) and a Blu-Ray DVD ($29.99). After a sales tax of 6.5% your total purchase amount comes to $564.39, which you happily charge to your credit card that has a 21.99% APR.

How Much Does It Actually Cost?

Upon receiving your credit card bill, you see that your minimum payment for your purchases is $15 a month and your credit card has a 5% minimum payment percentage. It will take 45 payments to clear your credit card balance, which amounts to one payment a month for 3.75 years, costing you $230 in interest (almost 1/3rd the cost of the original balance). Thus, your Playstation 3 with all the bells and whistles actually cost you $794.39.

What’s the Interest Worth?

$230 in interest =
At least 4 PS3 games

or
At least 7 Blu-Ray DVDs

How to Avoid Falling into the Minimum Payment Trap

Minimum payments often seem too good to be true, and that’s because they definitely are. To avoid paying an extra hundreds to thousands of dollars in interest fees, try doing one of the following:

1.    Use a debit card or pay with cash.
If you have the money to do so, just skip the credit card altogether and pay for your purchases directly.

2.   Look for no interest financing deals.
Department store credit cards are some of the worst high APR offenders, but they also often run no interest financing deals. Consider waiting for one of these deals to roll around before purchasing an item and charging it to the card—just be sure to pay off your purchase within the specified time frame, or you’ll get hit with a bad cumulative interest rate.

3.    Set a pay off goal.
Determine how long you want to pay the amount off by and stick to it. Use a payment calculator to determine how much you’d have to pay each month in order to get your card cleared by the specified time. Move around your budget if necessary to hit your goal.
Remember, you don’t want to pay more than you have to for the items you charge to your credit card. Keep that in mind when you’re paying down your card and don’t forget that making only the minimum payment will cost you more in the long run.

The True Price of Cats & Dogs: How To Budget for Your New Pet

Before you think about adding a furry friend to your family, you may want to consider how much your pet will cost over time.  While you can’t put a price on a best friend, you can put a price on raising and caring for it properly.  Here is a breakdown of the real price of cats and dogs:

Dogs

Initial Investment:

The price of buying a dog can vary greatly depending on the source.

Shelter/Rescue Dogs
Many shelter or rescue dogs can be free (although you’ll likely pay $50-150 in filling fees) from your local SPCA or animal shelter. Choosing a dog from a shelter is a great option as you will help to save a dog and they traditionally come with all vaccines and shots.

Dogs from a Breeder
If you choose to purchase your dog from a breeder, the fee will usually vary from $500-2,500 based on the type of the dog. However, this is not really the true cost of the puppy as these dogs usually require a series of shots and vaccines. The cost of vaccines will generally run between $100-300 to help your dog have a healthy life.

Initial Investment Totals: $50-$2,800

Veterinary Bills

Depending on if your new dog has come pre-vaccinated or not, your vet bill could be pricey for the first year. But spending the money upfront on vaccinations can save you hundreds (if not thousands) of dollars as well as help your dog stay healthy.

Also, your puppy should be spayed or neutered by the time it turns one year old. Adult dogs should cost you a fraction of what the average puppy would.

Vaccine Totals: $75 – $200
Spay/Neuter Totals: $100 – $300
Vet Bill Totals (yearly): $0 – $150 per year

Food

An essential to proper growth, purchasing the right dog food might cost more than you’d expect.  Puppies tend to eat exponentially more than dogs due to their rapid growth, but even with full-grown dogs, the daily food and treats can add up.  Larger dogs will also require more than smaller and toy breeds.

Food Totals: $250 – $1,000 per year
Treat Totals: $25 – $300 per year

Grooming

Some dogs fall on the high end of the grooming scale as they need to be trimmed monthly or quarterly due to their breed, whereas many dogs can slide by with minimal upkeep.  Even dogs that are very low maintenance require the proper tools to comb their coat, trim their nails and wash them when dirty.

Grooming Totals: $20-200 per year

Cages/Bedding/Toys

Many owners prefer crate-training their dogs so they can leave the house worry-free.  Whether or not you keep your dog in a crate, having proper toys so your furniture doesn’t turn into a chewed-up mess is an essential.

Cages/Bedding/Toys Totals: $50 – $300

Obedience Costs

Training your puppy or dog will help it be the best dog he/she can be.  Whether you put in the hours researching and training or you hire a professional, obedience training is an important (and sometimes costly) step for dogs.

Obedience Totals: $100 – $1,000

Preventative Medicine

Unless you really enjoy fleas or don’t value your dog’s health, preventative maintenance like flea control or heartworm prevention is essential.  While these items aren’t overly expensive, the monthly maintenance adds up.

Preventative Medicine Totals: $50 – $180 per year

Boarding Costs

Unlike cats, even if you take a short vacation, Fido must be taken care of.  Many dog owners also need to take their pup to doggy daycare while at work for the first few weeks when the puppy’s digestive system is still in its infancy.  This total can vary greatly, but is a much needed expense for many.

Boarding Totals: $0 – $2,000

Overall Price of Owning a Dog

The initial fees for purchasing a dog (food not included) is between $275 – $4400 when all is said and done.  However, the average lifespan of a dog is 11 years, making the total cost anywhere from $4,070 – $46,530*.
*This total is heavily skewed by the high end of the boarding costs – the total with boarding costs removed would be $4,070 – $24,530.

Cats

Initial Investment:

Much like dogs, the cost of a cat greatly varies based upon the source.

Shelter Cats
Many shelter cats can be free (but expect to pay $50-100 in filling fees) from your local SPCA or animal shelter.

Cats from a Breeder
If you choose to purchase your cat from a breeder, the fee will usually vary from $200-750 based on the type of the cat.  Vaccines will run between $50-200 for these cats as well.

“Free Cats” from Listings
Many others give away “free” cats, but they end up being not-so-free. Have a vet give kitty a once over and make sure vaccines ($50-$200) are up to date.

Initial Investment Total: $50-$1000

Cat Litter/Box

Bedding/Posts/Containers/Perches

One of the nice aspects of cats is that they are low maintenance when it comes to how owners have to handle excrement (waste?).  A good litter box and fresh litter are usually all a cat needs to become housebroken.  By scooping your litter box, many owners can make cat litter stretch for a bit longer, but the main objective is to make sure the litter box is clean at all times.

Box Cost: $10 – 50 initial investment
Litter Totals: $75 – 200  per year

Veterinary & Health Bills

These expenses might sneak up on owners, but being proactive with your kitten can really help to save you money by keeping your furniture or car intact.

Bedding/Posts/Container Total Costs: $25 – $150

Food

Vet bills are inevitable when owning a pet.  Even after your cat is fully vaccinated and you are applying preventative maintenance, you will still find yourself making trips to the vet.  Two main items that could be a cost for kittens are desexing and declawing.  Most owners and vets would not recommend declawing a cat due to pain and procedure, but in the end it is the owner’s choice.

Neutering Costs: $50 – $250
Declawing Costs: $50 – $200
Yearly Vet Bills: $0 – $250

Preventative Medicine

Wet or dry, your cat needs food daily.  This will be one of your cat’s largest expenses throughout its life.

Food & Treat Totals: $150 – $300 per year

Boarding Costs

Keeping your cat healthy means being proactive.  Things like heartworm prevention and flea control can save you from serious vet bills down the road.

Medicine Totals: $50 – $200 per year

Overall Price of Owning a Cat

One of the main benefits for cats is that they can exist on their own for short periods of time.  However, most people end up needing to board their cat sometime in their lives and it usually isn’t cheap.

Boarding Totals: $0 – $250

The initial fees for purchasing a kitten (food not included) is between $185 – $1700and will show you a whole lot of love.  Another positive about cats is that they usually live a very long life. the average lifespan of a cat is 14 years, making the total cost $4,035 – $15,700.

Conclusion

If you have a pet already, you probably know it’s expensive but love the little critter regardless.   Like anything though, it always helps to have a budget before jumping into any responsibility.  If you ask most pet owners, these total costs are nothing for the love and happiness their pets give back in return.  Hopefully these money tips help you take a close glance at your finances before adding another family member!