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Retirement Planning: Don't Stray From the Path


The County of Orange is pleased to provide you with a valuable retirement savings and investment program. This important benefit includes the educational tools necessary to build a personal plan, comprehensive investment choices, and a variety of services and resources for managing your account.

For many people, it's tough to find the money you need to save for retirement. Mortgages, car loans, childcare and college tuition are just some of the financial challenges we all face. Some people may even be supporting an aging parent. Many budgets are strained just trying to pay down high-interest credit card debt.

Does it seem like too many things are competing for your paycheck?

Chances are, when you take a closer look at your spending habits, you'll find money that can be better used to save and invest for your financial future. Pathways to Your Financial Future is about getting into a disciplined habit of saving and staying focused on your long-term retirement goals.

Money Well Spent
Looking for a good return on your investment? Try focusing on paying down expensive credit card debt. Suppose you have a credit card charging 12% interest. Paying it off is like finding an investment with a guaranteed return of 12%! In fact, you would actually need to find an investment that was earning around 17% in order to net 12% after paying income taxes (assuming a federal income tax rate of 25%).

Steps in the Making
One of the best tools to help you find savings opportunities is a spending journal. It can help you track where all your dollars are disappearing! Try keeping a spending journal for several weeks and study your spending habits. Here's a hypothetical entry from a one-week spending journal:

Sunday
$28.00 Had pizza delivered (remember to stock up on frozen pizzas!)
$5.00 Long distance calls to catch up with friends (use email more often!)
$4.00 New release video rental (now why did I get cable?)
Monday
$75.00 Groceries (forgot coupons and didn't make a list!)
$5.00 Toy action figure for Tommy while grocery shopping (He threatened a tantrum!)
Tuesday
$3.00 Coffee and bagel on the way to work (Fill coffee mug up at home before leaving!)
$30.00 Filled gas tank (Look into car pool or bus!)
Wednesday
$35.00 Monthly payment to fitness center (think about canceling membership and exercising at home!)
$2.50 Breakfast at the vending machines
Thursday
$7.50 Lunch: hot sandwich and soda at deli (Think about brown-bagging it a couple of days a week!)
Friday
$15.95 Bought new CD. (Check out used CDs next time!)
Saturday
$30.00 Chinese take-out for dinner (Impulse purchase; conveniently located next to video store!)
$4.00 Late fee on return of video (make sure to return videos on time!)
Easy savings opportunities ($31.00 in one week!)

A Step Beyond
Here are few small ways to help you find the money to contribute to your County of Orange 457 Deferred Compensation Plan - or to increase your current contribution.

Place a check by the ideas you could try:

It's a good idea to review you major financial expenses at least annually and look for ways to save on even just one of them. Place a check by the ideas you could try:

Focus On The Benefits of Budgeting

Tracking your spending is only the first step. What you do with your findings is critical in establishing the habit of saving money. And keep in mind: Budgeting doesn't necessarily mean you have to completely do without the things you enjoy the most. In fact, just a few small sacrifices here and there can make a big difference in the long run!

Expense Give Up How Often? Monthly Savings* Value if Invested for 25 Years*
Dinner out Once a week $100.00 $95,737
Lunch out Twice a week $50.00 $47,868
Coffee and bagel Twice a week $20.00 $19,147
Vending machine soda Once a day $12.00 $11,488
Movie ticket Once a month $10.00 $9,574
Video rental Once a month $6.00 $5,754
* Monthly costs are based on general averages. This illustration is hypothetical and assumes an investment in a tax-deferred retirement account in which you earn an average annual rate of return equivalent to 8%, compounded monthly. This hypothetical example is not based on (or predicting the performance of) any specific investment plan or savings strategy.

Pathways to Your Financial Future is about developing the conviction and discipline that is necessary to set aside money for your financial future. Stay focused and true to yourself-the potential benefits offered through your County of Orange Defined Contribution Program are well worth it!