Save for tomorrow, be happy today

Save for tomorrow, be happy today

Another reason to plan hard for retirement: It might cheer you up right now.

By Walter Updegrave, Money Magazine senior editor
September 24, 2008: 6:05 AM ET




(Money Magazine) -- In a sense, retirement planning is all about
deferred gratification. You live below your means while you work so you
can save for a time when you can live however you want. In short, you
give up something today so you can live better tomorrow.But what
if preparing for retirement had a more immediate payoff? Wouldn't it be
neat if you could enjoy the fruits of your effort now?Well,
maybe you already do. That, at least, is the implication of a recent
survey by insurer Northwestern Mutual and health education company
LLuminari. The study didn't address retirement per se.But as the
charts to the right show, people who do the sorts of things that
constitute good planning tend to feel happier than those who don't. It
appears that the very act of preparing for retirement may deliver a
reward now as well as later.No one is suggesting that getting
ready for your post-career days guarantees lifelong bliss or that
there's a formula for achieving nirvana. (Save an extra $100 a month
and be 50% more fulfilled!)But the notion that taking steps
toward a secure retirement can make you more content is hardly a
stretch. Economists, psychologists and others who study happiness find
that people who have a sense of control over their lives cope better
with stress and live more happily, while those who feel powerless are
more likely to be depressed.Or as the playwright George Bernard Shaw put it: "To be in hell is to drift; to be in heaven is to steer."So
what can you do to make yourself feel better about feathering your
nest? Apply these three happiness-linked actions to your retirement
planning:Set goals
If you fail
to set goals early on, you'll be drifting instead of steering. So think
about the percentage of pre-retirement income you'll want to replace
once you retire - say, 80% to 90%. Then use a calculator like our Retirement Planner
to see how much you must save each year to have a shot at reaching that
goal. Keep refining your savings target as you near retirement.Take steps to achieve your goals
If
the amount you're putting into your 401(k) falls short of your savings
target, boost your contribution. If maxing out your 401(k) still leaves
a gap, you can funnel additional savings into an IRA or tax-efficient
options like index funds or tax-managed funds.Control debt
It's
unrealistic to avoid borrowing altogether. But you can prevent debt
from undermining your retirement security by not carrying a credit-card
balance. Not only will you avoid onerous interest charges, but the
Northwestern study shows that people who are most committed to paying
off their cards are almost 20% more likely to describe themselves as
cheerful.So the next time you're trying to decide between a
higher 401(k) contribution and a big-screen TV, you might want to go
with the option that may make you feel good now and in the years ahead.Sign up for Walter Updegrave's weekly e-mail newsletter at cnnmoney.com/expert. E-mail him at longview@moneymail.com.

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http://money.cnn.com/2008/09/22/retirement/tomorrow_today.moneymag/index.htm