Saving for the Future is Easier than You May Think

If you’re one of the millions of consumers receiving a tax refund or bonus this time of year, you may be uncertain about the best way to spend or save your hard-earned dollars. What’s the best way to begin a savings plan or invest for the future? According to experts, the appropriate course depends upon life circumstances, including financial condition, short-and long-term goals, and the needs of your dependents. "Many people think of their tax refund as extra spending money, but they should consider setting at least a portion aside for the future,” said Donna DeMaio, president of MetLife Bank. "Extra money represents an opportunity to start planning for a retirement or saving for a child’s education. Saving is a critical issue, because financial advisors warn that many Americans are living paycheck to paycheck, and endangering their ability to live comfortably in their golden years.” Here are some options to consider: Pay off debt. For those who have incurred a significant debt burden, it may be wisest to pay off credit cards first. The high interest rates that most cards carry can negatively impact any other investment decisions. However, even if you have debt, it still makes sense to consider saving some money, in the event of an emergency. If your employer offers a 401k, be sure to participate. Investing in a 401k is smart, as it can reduce your taxable income, and many companies will match the contributions of their employees up to a specified amount, in effect giving yourself a raise. Consider a Money Market Account and CDs. Choose a Money Market Account to set aside funds for a rainy day, or to wait until a better investment opportunity comes along. Shop around for the best rate. CDs can often be a good investment, too, because they’re one of the best ways to invest, with minimum risk, and can be laddered to offer greater fluidity. Look for banks that offer consistently high rates—some institutions offer short-term promotional rates, but the rate can drop significantly after a few months. Think about an IRA. People concerned about having enough income to last throughout retirement should consider contributing to an individual retirement account (IRA). This past year, saving through an IRA became an even more attractive option, as the FDIC insurance for Roth and Traditional IRAs were increased to $250,000, rather than the basic insurance protection of $100,000 for other deposit products. There are different types available that can provide tax benefits, but each IRA type has its own specific eligibility criteria and contribution limits. For added savings, look for an IRA with no maintenance fees. You should note: before contributing to an IRA, consider consulting with a tax advisor regarding eligibility to contribute, as well as contribution limits. Consider annuities with guarantees for lifetime income, too. Even those who build a relatively large nest egg have no way of knowing how much income that nest egg will produce throughout retirement. With Social Security and pension plans becoming a smaller piece of the retirement picture, converting savings into a steady stream of income that lasts throughout one’s retirement makes good financial sense. Save now for college later. If your dream is to fund a child’s education, the best time to start saving for this goal is now. Consider tax-free options, such as a 529 college-savings plan. Also, investors should consider all the available options, including alternatives to traditional banking institutions. For instance, direct banks, which typically provide the convenient access of the internet, often offer more competitive rates. For those who feel uncomfortable conducting business on the Web, some direct banking institutions have developed a network of relationships with financial services representatives, which can offer the trust and comfort of dealing with a local financial adviser, and the advantage of great rates. "People can secure higher interest rates by depositing the money they want to save in a direct, or online bank,” added DeMaio. "Depending on your balance, just a one percent difference in the interest rate can mean hundreds, or even thousands, more dollars in your pocket in just a few short years.” As part of its Life Advice program, MetLife is offering two brochures, on "Investing Basics” and "Building Financial Freedom,” to help people better understand the intricacies of investing and take appropriate steps to prepare for the future. "Investing Basics” serves as a primer on investment styles, types of investments, and retirement investment vehicles. From savings accounts and CDs to bonds and annuities, this brochure can help potential investors recognize their investment style, understand the risk/reward relationship and learn about diversifying investments. "Building Financial Freedom” provides valuable information on how consumers can seize control of their finances and start planning for the future. The brochures are available by calling 1-800-MET-LIFE (1-800-638-5433) or by visiting www.metlife.com. MetLife Bank, NA (Member FDIC) is a federally chartered bank offering a wide array of banking products and services, including high-yield savings, certificates of deposit, money market accounts, individual retirement accounts and residential mortgages. For more information, please visit www.metlifebank.com. MetLife Bank is a subsidiary of MetLife, Inc. (NYSE: MET), a leading provider of insurance and financial services with operations throughout the U.S. and the Latin America, Europe and Asia Pacific regions. ### Bank deposits products are provided by MetLife Bank, N.A., Member FDIC