From the Virginia Society of Certified Public Accountants - Presented by Dean Knepper, CPA, CFP®


(August 4, 2005) — The best time to take steps for boosting your retirement nest egg is well before you retire. The following strategies from the Virginia Society of CPAs can help ensure a secure retirement.

1. Start NOW!

The sooner you start saving for retirement, the more time your money will have to compound and reap the rewards of tax-deferred growth. Although it’s a good idea to start saving early, don’t get paralyzed into inaction by thinking it’s too late. A late start is better than no start at all.

2. Take advantage of tax-deferred opportunities.

Each time you get paid, the government pays itself by taking taxes out before you even get your check. You should do the same by arranging for money to be deducted from your pay and put into a retirement plan before you ever get to see it.

401(k) plans are an especially good way to save for retirement, particularly if your employer matches part or all of your contribution, giving you an instant return on your investment of 25 percent, 50 percent or more. Employees who don’t have a workplace plan should consider setting up an individual retirement account (IRA), or if self employed, a Keogh or Simplified Employee Pension (SEP) plan.

Thanks to big increases in contribution limits, you now can tuck away a lot more into 401(k)s and other tax-favored retirement plans. And a special provision of the Economic Growth and Tax Relief Reconciliation Act of 2001 allows investors age 50 and over to make additional "catch-up" contributions. The catch up amount is $4,000 for 2005 and $5,000 for 2006.

3. Invest wisely.

Learn all you can about investing so you can maximize the returns your investments earn. CPAs agree that asset allocation is the cornerstone of good investing. In fact, how your money is divided among the different classes of investments — stocks, bonds and cash equivalents — can have a more significant impact on your return than the actual stocks and mutual funds you select.

The longer you have until retirement, the more risk you can withstand. Traditionally, over the long term, stocks have outperformed other investments, making them ideal for growth. CPAs generally recommend that you start out with an investment portfolio that is highly weighted in stocks, then switch to a more conservative mix as you move closer to retirement. But don’t abandon stocks altogether. To protect against inflation, even retirees should have some portion of their portfolio in stocks.

In addition to spreading your assets among the different classes, be sure to diversify by spreading your investments among different sectors, industries, companies and geographic areas.

4. Manage carefully.

A regular review of your retirement portfolio is essential for evaluating the performance of your investments and determining whether you need to take any actions. In some years, as certain asset classes in your portfolio perform better than others, you may need to rebalance your account to maintain your preferred asset allocation.

5. Cut expenses.

Cutting your expenses today is a good way to ensure that you will have more funds available for retirement. Try shaving 10 or even 15 percent from your living expenses and add the savings to your retirement nest egg.

6. Look to a CPA [and a CERTIFIED FINANCIAL PLANNER™ professional] for advice.

A CPA [and a CERTIFIED FINANCIAL PLANNER™ professional] can help you review your retirement saving strategies and recommend additional actions for boosting your retirement nest egg.


The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at


Lifetime Financial Planning, Inc.

Dean Knepper, CPA, CERTIFIED FINANCIAL PLANNER™ professional

2325 Dulles Corner Boulevard, Suite 500, Herndon, Virginia, 20171

208 South King Street, Suite 201, Leesburg, Virginia, 20175

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