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Cypen & Cypen
July 24, 2014

Stephen H. Cypen, Esq., Editor

1. MILLENNIALS SAVE, BUT WITHOUT RETIREMENT STRATEGY, FACE UNCERTAIN FUTURE: PR Newswire reports on a new study revealing retirement savings habits for American Millennial workers (born 1979 and 1996). Many Millennials entered the workforce coincident with the Great Recession, so one might conclude that prospects for achieving a financially secure retirement are not rosy. Much to the researchers surprise (and delight), Millennials are an emerging generation of retirement super savers. Millennial workers are focused on retirement in a big way. Research found that three out of four are already discussing saving, investing and planning for retirement with family and friends. In fact, Millennials are twice as likely to discuss retirement, compared to their parents' generation. Eighteen percent of Millennial workers frequently discuss the topic, compared to just nine percent of their Baby Boomer counterparts. Forty-one percent of Millennial workers expect that they will need financially to support their aging parents or other family members when they are retired. Millennials are witnessing firsthand their parents' retirement perils. Further, a whopping 81% are concerned that Social Security will not be there for them when they are ready to retire. Despite the confidence-shattering events of the Great Recession, Millennial workers' household retirement savings dramatically increased from $9,000 in 2007 to $32,000 in 2014, an increase which may be attributable to the timing of Millennials' entry into the workforce, access to employer benefits, strong savings rates and dollar-cost averaging of 401(k) contributions throughout the market's decline and subsequent recovery. Millennial workers who first started saving for retirement at the bottom of the equity market in 2009 have likely enjoyed substantial gains in their account values as the market recovered. Unlike other generations, Millennials were less likely to have suffered deep declines in their accounts during the recession simply because they had not been working and saving long enough to have accumulated large balances. Millennial workers are getting a tremendous head start on retirement savings: 70% are already saving for retirement either through employer-sponsored plans or outside the workplace, they began saving at an unprecedented age of 22. One of the most important secrets to attaining retirement readiness is having a well-defined written strategy about income needs, costs, expenses and risk factors. While 59% of Millennial workers say they have a retirement strategy, only 13% have a written plan.

2. PEOPLE CONTRIBUTE MORE INTO IRAS; AVERAGE SAVINGS ROSE 5.7%USA Today reports that people of all ages are saving more for retirement by making bigger contributions than ever to Individual Retirement Accounts. Average IRA contributions for tax year 2013 increased 5.7% over the previous year and reached $4,150, an all-time high. Average balances are up almost 10% over last year, to $89,100. Overall, average IRA contributions for investors in their 20s, 30s and 40s are up, respectively, 3.9%, 6.7% and 6.2%. A separate study, by TIAA-CREF, shows 78% of Americans get matching employer contributions when they contribute in employer-sponsored retirement plans.

3. CREATIVE FINANCIAL IDEAS FOR RETIREMENT: One of our biggest fears is that we have not saved enough for retirement saysUSA Today. It is time to stop worrying about it and start doing something. The fact is, there are a growing number of options. The answer may not necessarily be working in your current job through retirement. Many people may not all be healthy enough to accomplish that feat. Forty-seven percent of retirees left the workforce sooner than they had planned. People in that position need to try not panicking, because they have options. But, as with anything else, you need to first look at you. Knowing what your expenses are can go a long way in making sure you can have a comfortable retirement. There are other ways for retirees actually to earn -- or save money -- many probably you have not even considered:

  • Can you turn your hobbies into extra income? One person, a former engineer, now teaches clarinet, bassoon and saxophone to children and adults. Another became a substitute teacher. is a website that offers online instruction if you have any skill -- plumbing, baking or cooking -- you can turn it into a course and offer it though the website. One woman created a cake-decorating course, which brought in $21,000 in extra income.
  • Embrace the "shared economy."  A growing trend is people renting rooms like a hotel or bed and breakfast. You can even rent out rooms in your house through, Vacation Rentals By or Airbnb. It is almost like a mini bed-and-breakfast style way to make extra money. Usually the kids are gone, so most people close to retirement have spare rooms. One person was able to rent out his car to folks who needed to run errands; he makes about $1,000 extra per month. Another option: take care of pets when their owners are on vacation.Check out DogVacay.
  • Sell or rent your home and move into a luxury home. Showhomes offers unique opportunity for Baby Boomers and empty nesters. The company "stages" homes for sale. The theory is that homes are easier to sell if someone is actually living in them. Match that vacant home with someone like an empty nester with nice furniture. They can live in a home with their own furniture. They pay 30% to 50% less than the market. They can live in a golf course gated community. Showhomes may even pay you to move in, and move out when the house is sold.

4. INTERESTING FACTS: The roar that we hear when we place a seashell next to our ear is not the ocean, but rather the sound of blood surging through the veins in the ear.

5. TODAY IN HISTORY: In 1965, Casey Stengel resigns as manager of NY Mets.

6. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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