Estimated read time: 2-3 minutes
Paul Nelson reportingFinancial analysts say many people don't know about all the ways they can save money for retirement. But even people who are setting money aside might find their nest eggs shrinking soon.
For some people, saving money for retirement is very difficult.
The state Director of AARP Utah, Rob Ence, said, "People rate that as hard as quitting smoking or losing weight."
Ence says even for people who do set money aside, their nest eggs might not cover as much as they might expect.
"They find their resources are dwindling. The cost of living for everything is going up, [like] the price of gas. You look at the fact that we're living longer, so the resources have to last a longer period of time," he said.
Ence says when food and gas prices go up, people have less to put into their savings plans. Home values are down, so people don't have as much money in that asset as they might expect. Also, Ence says stocks and savings accounts aren't yielding as much as they used to.
"The most important thing is that when people decide the nest egg they want to build, they are very prudent in the kinds of things they put their money into, that they don't do it on the advice of a friend, and they don't do it because it's the latest and greatest. They do things that make sense for them that they understand," he said.
Some Utah financial planners say high gas and food prices haven't cut into retirement accounts yet, but they soon will.
AAA Financial and Retirement Planning Services President Greg Williams said, "Probably in the next six to 12 months, those might be some real pressing concerns when we've seen the cost of gas go up 30 percent in the last year."
Williams says people should review what kind of tax bracket they expect to be in when they retire because that could affect what kind of 401(k) plan they use.
"If my future tax liability is going to be equal to or greater than it is now, then maybe I definitely look at the Roth," he said.
A Roth 401(k) lets you pay taxes on your retirement fund as you contribute to it, while a traditional 401(k) allows you to defer your tax payments until later. But, he says deciding which fund to pick is never that black and white.
He also says if people look at their spending habits, they can almost always find ways to tighten their belt and save money for later.