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/

So how do you go about making this extra money? You could work more at your regular job. Odds are though, you’re a salaried employee. Working more will only mean more time away from your family, not more money. And even if you have a hourly job, extra hours are probably hard to come by in this economy.

You could ask for a raise. Not a bad idea in normal times. But we’re not exactly living in normal times. Many of us are worried about just keeping our jobs. So what’s the solution? For me, it’s been having my own blog and writing about personal finance. I’m able to make a quality secondary income from my efforts.

So, is blogging about finance the answer? For me it was. But it isn’t necessarily what’s going to bring you extra income. Here’s why:

I’m passionate about personal finance. It’s something I liked talking about prior to even blogging about the subject. Also, because I’m passionate about the subject, I meet other people who also like to talk and write about it. I learned from their successes and have since been able to find my own success to share. Lastly, because of my passion, I was able to develop a plan for a successful blog, as well as, put in the time to actually make it successful without it feeling like a huge hardship.

So what does all this mean for you? How do you take the lessons I’ve learned from my putting my passion project into action and use it to provide more income for you and your family? It’s your lucky day. I’ll do it for you. Here are my 5 tips for making extra money. Remember: It starts with passion.

Turn a Hobby into a Paying Gig – What are you hobbies? What are the things you like to do with your free time? That’s likely the thing that you should focus on to create some extra income. You’re already passionate and knowledgeable about your hobby. Find a way to turn it into extra money. Need specific ideas for hobbies that can bring in extra income? Download my ebook, 52 Ways to Make Extra Money…Revisited.

Credit: wka

Just Start, Perfect Later - You’ve heard it before, “the perfect is the enemy of the good.” This is so true when it comes to making extra money. A lot of time and money is wasted on putting together the perfect business plan. Some planning is good, but you’ll learn far more about your side business if you just start. You don’t need business cards or a website to get started. Just go make sales. Then get those other things going once you figure out how to make money with your side business.

Find Someone Already Having Success – Finding success with any business rarely happen to those who try to go it alone. Besides, most worthwhile money making ideas aren’t novel. Someone has already done it and is doing it better than you could ever imagine. Find those people, make friends, provide value to them, and then study how they do what they do. This is the quickest way to turning your struggling side income into a successful money maker.

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Set Goals and Create a Plan – At some point, maybe after you’ve got some sales under your belt and have a feel for the business, you need to establish some goals. This goal plan will then become the guide for how you go about your side business over the next few weeks, months, and years. Revisit these goals on a routine basis and make adjustments as you learn more about the business and your expectations become more realistic.

Put in the Time and Discipline - My last tip is one you might not want to hear. It takes a lot of time and effort to produce something valuable enough to bring in a consistent extra income. I spend a lot of late nights and early mornings working on my side business. But because it’s a passion of mine, I can stick with it, even when it seems like success is a bit further down the road.

Profits could be huge. All three banks will charge $10 for every $100 borrowed, a 120% interest rate for those who pay off their loans in a month. By contrast, the average variable-rate credit card charges 11.42% annually, according to Bankrate.com.

But if the banks are making out, payday lenders are doing even better. The average payday loan costs $15 to $30 for every $100 borrowed, at least a 50% premium to what the big banks charge and as much as 400% annually. Why the gulf in the interest rate? Payday lenders typically require borrowers to repay every two weeks. Many don’t, and suffer fees and compounding interest payments as a result.

“When many people get into a financial bind, they go to a payday lending store and borrow a few hundred dollars,” says Ethan Ewing of consumer advocacy and information site, Bills.com. “They plan to repay the loan in a week or two, when they have the money. But they pay a huge price. Payday loans can become a dangerous addiction that can cost hundreds or thousands of dollars a year.”

Credit: aresauburnphotos

If at this point you’re wondering how anyone ever pays off a payday loan, you aren’t the only one. Several states have taken action against the industry in recent years. Virginia just extracted an $85,000 settlement from payday lender Advance America, which it accused of 119 violations of its consumer-finance laws, reports the Richmond Times-Dispatch.

Payday lending’s usurious rates and dubious reputation has inspired advocacy groups and sites such as Bills.com to pitch alternatives for the cash-strapped. Ewing, in particular, sent me eight tips in a press release recently. Here are what I believe are his best two, with my comments below.

1. Talk to your creditor

Creditors want to get paid, and they’d rather get paid at full price. But they lose more if you don’t pay at all, or if your account gets referred to a collection agency. Negotiate first; borrow second. You may be surprised by how willing your doctor will be to establish payments for an uncovered procedure, or what your credit card vendor will do to keep you around.

2. Borrow from a friend or relative

Unlike a payday lender — or, for that matter, a big bank acting like a payday lender — your family and friends care about your well-being, and may be able to help you out on terms that you’ll get nowhere else. But you’re also putting your relationship at risk.

“Don’t use this option unless you know you can pay it back, and borrow only on a rare occasion,” Ewing says. He also advises that the agreement be stipulated in writing, including the repayment terms.

The Great Recession has put millions out of work, and too many are making do with payday loans. Many more could join their ranks now that big banks want a cut of the action. Either way, consumers lose — but only if we accept payday loans as an option. We don’t need to.

Tim Beyers is a professional freelance writer who has been a regular contributor to The Motley Fool since 2003. He is also the co-creator of Editorchat and curator of The Freelance Writer’s Helper. Visit his Website or find him on Twitter, @MileHighFool.

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But this too will pass. In fact, economists are now saying the recession is over. Of course, all that means is that the economy has stopped contracting. It doesn’t mean more jobs are around the corner, and if you’re unemployed you’re probably still scrimping for coins to fill up your gas tank.

If you do have a job, though, don’t let the economic malaise undermine your long-term savings plan. Stock market downtowns are the best time to invest for the long haul. You’re buying into the market at lower prices (though, not as low as they were — the market has gone up 44% since March).

If you’re young and have some 40 years until retirement, the best thing you can do for yourself financially right now is to contribute to your 401(k), or your 403(b) if you work for a non-profit. If your employer offers one of these plans, it’s the simplest retirement savings vehicle available to you. You set it up for automatic withdrawals from your paycheck, so you never even miss the money. Usually you can contribute up to around 6% of you salary.

Aside from the automatic savings, there’s one nifty thing that makes a 401(k) a no brainer: They take the money out of your paycheck before it’s taxed and it grows tax-deferred until you start to withdraw the money in retirement.

What’s more, your employer might match a percentage of what you contribute to your 401(k). Typically, you might get 50 cents on the dollar up to 6% of your salary. Don’t let the recession keep you from collecting this free money!

So max out your 401(k). Put away as much as you can. Once you’ve got the account set up, make it easy on yourself. If you’re in your 20s and want to retire in your 60s, you might as well choose a broad, diversified stock fund, like a total market or S&P 500 index fund, which models the stock market’s returns.

Despite the recent future, over the long haul, stocks have been the best asset class for growing your money. And if they go down in the short-term, you don’t have to sweat it. You’re dollar-cost-averaging into the market, or putting the same amount of money into it with every pay check. So when prices go up, you buy less. When prices go down – it’s like a sale on Wall Street – you buy more automatically.

The beautiful thing about a 401(k) is that you can set it and forget it. As you get older and closer to retirement (decades from now), then you can worry about changing your asset allocation into safer vehicles to protect your money. But for now, take advantage of the recession and make good use of that 401(k).

Credit: paul_everett82

Remember the day you brought home your new child and thought, “This is the BEST day, ever! I am going to love being a parent,” then the baby pooped, at which point you realized that this precious child is going to be nothing but hard, stinky work and is going to be the costliest decision you’ve ever made?

Yeah. Fond memories.

Of course, I am not saying that children are nothing but expensive accessories in your life, but one day, you’ll realize that you want to send your child off to college to gain themselves a fine education, because clearly, after all those diaper changes, that kid owes you. BIG TIME.

So, where do you start? I figured that I was a pretty smart, so I decided to google my little fingers off and see just how easy it is to save money for my children’s education. What I discovered is that not only do I not know Where’s Waldo, I also don’t know diddley about choosing the right plan for my kids’ college fund.

I decided that clearly I needed help, so I asked a whole bunch of smart people, who actually have degrees in this field, and here’s what I discovered:

529’s are not for everyone -  These plans are all about tax-free growth. So if you’ve just had a baby,excellent. If your child is 13, not a lot of moola is going to accumulate in the next 5 years. If you are a making a high income and not even in the running for financial aid, then why are you reading this… go ask your accountant already. Kidding! Author Tim Higgins from CollegePlusRetirement.com suggests that 529’s are a great way to reduce taxes on your savings, as well as a great place for grandparents who would like to help with their grandchildren’s college expenses. They can control all the money and can gift large amounts out of their estate.

Given the recent decline in most people’s 529 accounts, many parents are questioning even keeping their money in a 529. “What many need to look at now is how well their plan provider managed the downturn. Just going with your state’s plan may not be the right thing to do going forward, if your manager took on more risk than was appropriate, or doesn’t offer save options, like money market accounts.” says Robert Schmansky, CFP.

by tomsaint11

Think creatively – Roth IRAs are a good choice as you can pull out the principal after five years with no penalty for educational purposes. If your child does not attend college, then your money will continue to grow for your retirement.

Manuel Fabriquer, a Certified College Planner from College Planning ABC, says “If the parents do not want to risk losing principle, a CD account is going to give peace of mind in this economy. The rates are low and the accounts are FDIC insured now to $250,000. It’s not fancy but it will work for now until the economy gets back on its feet.” Which as we all know is going to be next week. Right? Wrong.

With all the time you are on the internet, why not use Freshman Fund as an innovative way to save for college? All it takes is an email address, two minutes and grandparents, aunts and that lady that lives down the street (who makes those fabulous cookies), can easily and quickly deposit money into your child’s 529 account.

Wait! Not easy enough? How about using your everyday checking account to help save for college? FutureTrust Banking Center’s 529 checking accounts earn a minimum of 1 percent interest on their average daily account balance. That generated interest is automatically deposited into a college savings plan of the account holder’s choice. Suh-weeet! Anything that I don’t have to get up off the couch to do is all right with me!

Saving, schmaving – If saving is not an option for your family right now, as it is for many of us, don’t forget that school scholarships, grants and financial aid are all worth looking into for your child’s education. Instill in your kids now the importance of good study habits and a great GPA and it will pay off come college application time. There is no need to forgo your own retirement for your kid’s education. If all you can afford is putting some money away for retirement, then pay yourself first. The government doesn’t offer financial aid for road trips to visit your grandchildren.

As always, you can sign up for a free Quicken Online account to keep tabs on your investments. It won’t cost you a cent and you’ll be happy to see if your money is growing enough to send junior to his favorite school.

If not, there’s always living with Mom and Dad. Oh snap! Did I say that?

Consumers discuss how they're weathering the storm at Intuit Money Matters Town Hall

10:09am: Todd finishes by saying that the tough times we’re in are changing all of us for the better. He says money can be used wisely to improve your lives. Be sure to watch archived version of this on the Intuit.com website. Thanks to all…and check our our Small Business Town Hall coming up next.

10:07am: Session is wrapping up…Todd and Farnoosh are thanking everyone and both said they learned a huge amount from each and everyone of the folks on the panel.

10:04am: Farnoosh reminds the group that even with bartering, you do have to report it to the IRS so you stay within the rules. She also said people are getting closer to one another during this time. People are staying more at home…including Farnoosh’s neighbor in NYC who is an opera singer. Being at home more now, she hears her singing!

10:02am: Farnoosh is going back to bartering…there’s some energy in the room to discuss it. Bob is a big barterer and has been doing it for 20 years.

10:00am: Stimulus will invest in new sectors like infrastructure, energy, education and engineering. Farnoosh and Todd both say there will be great opportunities for employment in those sectors.

9:55am: Farnoosh asked the group how much they knew about the 2009 Stimulus. Kim is a tax preparer and she’s been studying it because there are opportunities there. She pointed out the new credits around green energy as a great opportunity.

9:54am: Todd mentioned the struggles of the auto industry and asked if anyone was planning on buying a new car. Kim said yes, and that because her and her husband have good credit and low debt, they were able to get an amazing deal on the financing.

9:52am: Mara says shes going with a smaller community bank. In fact, her contact there says they are swamped with people who are worried about larger banks and want a more intimate relationship with their financial institution.

9:49am: Farnoosh asked the group if anyone was concerned with putting their money in banks. Yvette raised her hand and said yes. Her and her husband invest and they are worried about the stability of some of the institutions they deal with. Farnoosh reminds folks that the FDIC protects you up to $300,000.

9:46am:All participants today say they know and track where their money is going. Todd adds that most Americans do not do this. 70% of Americans live paycheck-to-paycheck – and that’s even folks with a six-figure income -and they need to keep an eye on where they’re spending to make sure they meet their obligations and have some money left to save.

9:41am: Todd reminds everyone to check their medical bills. 80% of medical bills consumers receive have errors on them. You’re leaving a lot of money on the table if you don’t check. He also suggested asking doctors for 90-days worth of prescriptions so you can take advantage of lower-priced mail-order options. He also talked about the new, free Quicken Health Expense Tracker as a way to stay on top of medical expenses.

9:39am: Rick is self-employed and said its tough to get insurance as someone not part of a larger group. His rates have been raised twice in six months without him making any claims. Farnoosh says you should check associations you belong to, even your religious group, for group insurance options.

9:37m: Farnoosh is telling the folks to consider bartering…even with your doctors. They’re looking for services like website design in exchange for their services. She said it seems odd, but don’t rule it out. You can save a ton of money, especially if you’re uninsured, by doing so.

9:29am: Todd Stanley is talking about the importance of knowing how much money you have to spend each and every month. Using things like Quicken Online Mobile can help you make sure you don’t over spend. He also stated people need to make sure they pay at least the minimum payments on their debts to preserve their credit rating.

9:24am: Farnoosh is asking the group about how much debt they carry. Not only do people have to cut back, but they also need to pay down debt. Farnoosh says to call your debtors and ask to settle if you’re having problems.

9:22am: Chris lost his job, had to buy a new car, and get insurance to protect to his family. He’s really had to cut spending and he realized how much he had been spending when times were better.

9:21am: Check out the live stream of this Town Hall: http://www.justin.tv/intuittownhall

9:20am: Cydney has one client but her spouse works as well so they’re doing OK with money these days. Both her and her husband are independent contractors. They do have some savings but are adjusting their lives to spend less and save more. Farnoosh says she is in a good position since she is a team with her husband.

9:18am: Participant Anna says she is not spending money outside of her obligations. She’s cut way back on spending and isn’t splurging on things she use to like a day at the spa.

9:16am: First topic introduced by @farnoosh is about paying the bills…and asking folks how they’re making money.

9:12am: Session is underway. Introduction by Quicken VP/General Manager Todd Stanley (@quickentodd).

9:09am: Renowned editor Michael Runzler just arrived. Bloggers and journalists have arrived. Including Harry McCracken from Technologizer.

9:03am: @quickentodd and @farnoosh are getting their microphones setup so we’re going to get started soon. The consumers joining us today are all set and very motivated to share their stories. We’re in for an informative and great session.

8:45am: Scott from the Quicken team…getting ready to live blog from the Intuit Money Matters Town Hall. Follow us on Twitter (@intuittownhall, @prgully, @quickenchels) or check in here for some updates on this discussion.

We just spent the last 45 minutes mingling with consumers and hearing their money stories. It’s really interesting to hear how the current economy is impacting everyone.

More to come…stay tuned.

WATCH THE LIVE FEED OF TODAY’S EVENT: http://bit.ly/intuitth

a ladder

A CD ladder is a certificate of deposit ladder. A certificate of deposit is a type of account you have at the bank where the bank will agree to pay you a certain interest rate for an agreed period of time. Let’s say you saw a 2.50% APY 12-month CD, that means the bank will pay you 2.50% APY for twelve months. It also means you don’t have access to the money for twelve months. Unlike a savings account, you lose the flexibility of accessing your funds whenever you want and replace it with a guaranteed interest rate. With how quickly rates are falling these days, locking in a good rate is very important. In extraordinary circumstances, you can always close your CD and get your money back if you pay a small penalty, usually 3-6 months worth of interest.

Now that you know what a CD is, what is a CD Ladder? A CD ladder is where you open multiple CDs for different periods of time so that they end in different months. In a 12-month CD ladder, you would open 12 different CDs with 12 different periods – a 12 month CD, an 11 month CD, a 10 month CD, etc. After one month, the 1 month CD will end and you take the funds and put them into a 12 month CD, thus continuing the cycle. It’s a ladder because each of the CDs is a rung on your ladder. The end result is that each month you have at least one CD maturing so that you can spend it if you are in an emergency. If you don’t have an emergency, you simply reinvest in another CD.

Why would you do this? You get a higher guaranteed interest rate while maintaining access to your money. What’s nice about having online banks is that many of them have very low minimums to open a CD. Walk into a regular bank and you might need $1,000 to open a CD. At some online banks, you only need $1! You could open a CD with as little as $12.

What’s the catch? Many banks only offer 12 month and 6 month CDs, so in the beginning you’ll have to do a little extra work to get the ladder build. In the first month, you’ll want to buy a 12 month and a 6 month CD, keeping the rest of your money in the high yield savings account. In the second month, you’ll want to buy another 12 month and 6 month CD because your first two CDs will now be an 11 month and a 6 month CD (since a month has passed). In the third month… I think you get the idea. When it’s all said and done, you’ll have the CDs and only have to buy a new 12 month CD each month.

I would avoid buying CDs at different banks because it’ll become very difficult to manage the different accounts. I would pick the one with the best 12-month CD rate and work backwards from there. In the end, you will only get confused if you have a 12 month at Bank A, a 6 month at Bank B, etc.

This post is by Jim Wang, personal finance guru behind the Bargaineering blog [RSS].

Thanks,
Barron Ernst
Quicken Online Product Manager

Thanks,
Barron Ernst
Quicken Online Product Manager

Need proof? Here’s an an interesting investing article about the 10 stocks that would have made you rich if you had invested in them early. The article includes a calculator to estimate what an initial investment would have netted you today—so you can laugh (or cry) about it.