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Three ways to become a better saver.

There's no question that your paycheck is in high demand these days. Between mortgage payments or rent, bills, and general living expenses, your income has to go a long way. For many, it's difficult to justify setting aside money for the future when there are so many concerns competing for every dollar today.

So how is it possible to stretch your paycheck far enough to include retirement savings? Here are three steps you can take in the right direction, right now:

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Increase savings regularly

Everything you do in life starts with taking the first step toward a goal—no matter how humble that step may be. While financial experts agree that you should save at least 15% of your pay each year to retire comfortably, often that amount seems out of reach. If your budget won't allow it now, work your way there with steady increases. The earlier in your career you begin to save, the sooner it becomes a natural part of budgeting your paycheck.

Cut back where you can

Instead of focusing on how you can come up with large chunks of money to set aside, think more modestly. Identify where in your day-to-day life you can cut back spending and increase your plan contribution. Small sacrifices, such as skipping the upscale coffee shop in favor of brewing your own or taking your lunch to work, can go a long way toward your savings over time.

Educate yourself

Your retirement is in your control, and we want to help you succeed.
There are many resources available right here—including helpful
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Too much debt does not mean
you can't save

If you feel that you can't afford to save because you're carrying too much debt, you're not alone. Fortunately, there are some steps you can take. After all, it's essential to manage debt, so it doesn't manage you. By following these simple rules, you can manage your debt wisely, which can help free up money to save and invest for the future.

  • Establish a good credit history: Pay your bills in full and on time. A good payment history can lead to easier access to credit when you really need it and could also make you eligible for more attractive interest rates.
  • Borrow wisely: Don't take on more debt than you can afford and beware of predatory lenders and aggressive salespeople. If a deal sounds too good to be true, it probably is.
  • Work with your creditors: If you get behind, call the people to whom you owe money and try to work out a manageable repayment plan. Since collecting on unpaid debts can be costly and time-consuming, many creditors are willing to work with you. Get help if you need it—nonprofit credit counseling services can help get your bills under control.
  • Pay higher interest debt first: Try to pay down the debt that is costing you the most. Tackle the higher interest debt (credit card for example) first and then move on to the one with the next highest interest rate.
  • Check your credit regularly: Mistakes happen. Identities are stolen. One way to protect yourself from these pitfalls is to check your credit report regularly to make sure it's accurate. Free credit reports are available on an annual basis from the main credit reporting agencies. It's easy and could alert you to problems before they get out of hand.

For more information, visit your local library and ask for a list of books, articles, and other resources on personal debt management. Check your credit online at annualcreditreport.com. You can also go to the U.S. Financial Literacy and Education Commission's website at mymoney.gov.

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Overwhelmed?
Take it one financial step at a time

We understand that you might be feeling overwhelmed by finances. And that saving for retirement is probably the last thing on your mind. But you also know that it's important to think about your future. The first step in taking control of your financial life is to have a plan for balancing the money you earn with your expenses and savings.

  • Create and follow a household budget: Creating a household budget is the first step in getting your financial house in order. If you're thorough in gathering information and honest in assessing your needs and goals, you can create a budget that allows you to prioritize your spending and begin planning for future wants and needs.
  • Gather your financial information: Gather all of your financial documents. This will help you get a clear picture of your current financial situation. Include bank statements, investment account statements, monthly bills, mortgage payments, pay stubs, etc.
  • Inventory your income: Take stock of your monthly income. In addition to income from your regular paycheck, don't forget to include other sources, such as investment accounts, trust accounts, rental property income, and part-time work.
  • List your expenses: List your monthly expenses as "required" or "discretionary." Required expenses can include groceries, clothing, mortgage/rent payments, insurance payments (life, health, auto, homeowners, etc.), and utilities. Discretionary expenses could include travel, entertainment, hobbies, gifts, and dining out.
  • Don't forget about "other expenses": Expenses should also include money that you need for your next car, your child's education, and your retirement savings. Factoring in what you should set aside for these items is an important part of the budgeting process that is often overlooked.
  • Adjust your spending habits: If you're spending more than you're taking in each month, you should first take a look at trimming your discretionary spending. Try eating out less each month, selling the motorcycle, or scaling back the plans for the family vacation.
  • Revisit, review, and revisit again: Finally, after you've gone through the time and effort to create and put your budget into action, don't forget to review it regularly to make sure you're still on track.

For more information, visit your local library for a list of books, magazine articles, and other resources on household budgeting. You can also visit the U.S. Financial Literacy and Education Commission's website at mymoney.gov.

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Top 10 reasons to start saving
for your future.

With increasing life expectancies, you could spend 30 years or more in retirement. Social Security probably won't cover all of your retirement expenses. And inflation may push prices up each year. These are just a few reasons to save for your future. Your company's retirement plan offers even more. Here are our top 10 reasons to start saving through your plan today.

Reason #10:
You may need more money than you think. People are living longer, and it's not uncommon to enjoy a 30-year retirement or longer. That means your retirement savings may have to last you almost as long as your working career.

Reason #9:
Inflation—things just keep getting more and more expensive. Remember what an ice cream cone cost 10 years ago? Just think how expensive it will be to take your friends or the grandchildren out for ice cream when you're retired.

Reason #8:
Unlike today's retirees, you may not be able to count on Social Security. Most of us are going to need additional retirement income. One way to save that money is to join your employer's retirement plan.

Reason #7:
Your employer's retirement plan offers you several different investment choices—so you decide how your savings are invested. Depending on your situation, you can stick with higher-risk stock investments now and allocate more of your investment into lower-risk bond and money market/stable value investments when you near retirement.

Reason #6:
It's easy to participate in your employer's retirement plan because you don't have to make a big commitment.You can save as little as 1% or 2% of your pay—for many, that's just a few dollars a week.

Reason #5:
The plan keeps you on a disciplined savings path. Because your contributions are directly deducted from your paycheck and deposited into your plan account, you don't have the temptation to spend that money somewhere else.

Reason #4:
It doesn't matter if you're still working for the same employer when you retire. The vested portion of your plan account is portable, which means that if you change jobs, your vested account can move with you.

Reason #3:
Every before-tax dollar you contribute to the plan is one less dollar you include in your taxable income on your tax return today. That's the benefit of before-tax contributions—they can lower your current taxable income.

Reason #2:
Your savings can grow tax-deferred. That means you don't pay taxes on any earnings until you take money out of the plan. The money you would have paid Uncle Sam gets the opportunity to grow and compound for your future.

Reason #1:
Because of the benefits of compounding—when money makes money, and then that money has a chance to make money—the sooner you start saving for your future, the easier it will be to reach your goals. Compounding makes the money you save today more powerful than the money you save tomorrow.

For more information, visit your local library and ask for a list of books, articles, and other resources on personal debt management. Check your credit online at annualcreditreport.com. You can also go to the U.S. Financial Literacy and Education Commission's website at mymoney.gov.

This article has been prepared by T. Rowe Price Retirement Plan Services, Inc., for informational purposes only. T. Rowe Price Retirement Plan Services, Inc., its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this article, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this article.

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Don't let excuses stop you from saving.

Perhaps you've said it a hundred times: "I need to start saving for retirement." But a hundred reasons always seem to stop you. There will always be a reason to put off saving for retirement. That's why it's important to get started.

Where will your retirement money come from?
It's a fact that people today depend less on traditional sources of retirement income, such as Social Security and pensions. For example, the average retiree (someone 65 or older with at least $57,957 in annual income in 2010) currently receives only 17% of his or her income from Social Security.1 For the rest, the retiree must depend on personal savings, including retirement plans like the one your employer offers.

Putting off saving puts you behind
When it comes to saving for retirement, time is of the essence. If you delay contributing to your retirement plan for just 10 years, your potential account balance could be significantly less when you reach retirement. Consider the hypothetical example of Cathy and Dan. When they were both 30, Cathy began saving $250 a month in her employer's retirement plan. Dan had a reason for delaying saving. He wanted to pay off his credit card debt first. After 10 years, Dan finally got around to saving for the future.

Now that they are both 65 and getting ready to retire, Cathy has $174,761 more than Dan. You can see how putting off saving—even just for a few years—put Dan far behind.

Meet two hypothetical employeesBefore-tax account total
Cathy contributes $250 a month for 30 years$304,993
Dan delays saving for 10 years and then contributes $250 a month for 20 years$130,232

This example is for illustrative purposes only and is not meant to represent the performance of any of your plan's investment options. Assumes $250 invested each month and a 7% annual rate of return.

Get ahead by saving today
Have you started thinking about your retirement? Whether you're 25 or 65, it's never too soon—or too late—to start. Don't let another excuse get in the way. Take the step today toward building a more secure future.



Here are just a few reasons to get started

Simplified savings. Because plan contributions are directly deducted from your paycheck and deposited into your plan account, you don't have the temptation to spend that money somewhere else.

Portable account. The vested portion of your plan account is portable, which means that if you change jobs, your vested account can move with you. It doesn't take a lot to save a lot. You can save as little as 1% or 2% of your pay. For many, that's just a few dollars a week. Then, you can increase your contributions whenever you get a pay raise.

You get tax benefits. You don't pay taxes on your earnings until you take money out of the plan. Plus, every before-tax dollar you contribute is one less dollar you include in your taxable income on your tax return today. That means you can lower your current taxable income and increase your spendable income.

Time is on your side. Remember from the example, the longer you stay invested and have your earnings automatically reinvested, the more opportunity there is to increase the value of your account.

Start saving today
If you would like to enroll or have any questions about the plan, visit the website at rps.troweprice.com. Or call your plan's tollfree phone number. T. Rowe Price representatives are available during business days between 7 a.m. and 10 p.m. eastern time.

1 Source: Social Security Administration 2010, Income of the Aged Chartbook. Released March 2012.

This article has been prepared by T. Rowe Price Retirement Plan Services, Inc., for informational purposes only. T. Rowe Price Retirement Plan Services, Inc., its affiliates, and its associates do not provide legal or tax advice. Any tax‑related discussion contained in this article, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this article.

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