For the first time in 2009, consumers spent less money than they did the year before. Household spending decreased 2.8 percent from $50,486 in 2008 to $49,067 in 2009. This is the first spending dip since the Bureau of Labor Statistics began measuring consumer spending in 1984. Consumers cut their spending on almost all goods and services except for health care (up 5 percent), education (up 2.1 percent), and tobacco products (up 19.9 percent) between 2008 and 2009, the Consumer Expenditure Survey found. Here’s a look at what we’re now spending less on.

[See 50 Best Funds for the Everyday Investor.]

Transportation. Americans reduced the amount they spent on transportation by 11 percent between 2008 and 2009, mainly by purchasing lower cost gasoline and motor oil (down 26.9 percent). Gas prices significantly spiked in 2008 and then fell in 2009, resulting in average annual expenditures on gasoline dropping from $2,715 in 2008 to $1,986 in 2009. Drivers also spent an average of 3.6 percent less on vehicle purchases.

Household furnishings and equipment. Consumers trimmed about $118 from their household budgets by cutting back on their purchases of household furnishings and equipment, a decrease of 7.3 percent from 2008. Housing expenditures overall dropped by 1.3 percent in 2009.

Entertainment. Individuals cut their entertainment expenses from an average of $2,835 in 2008 to $2,693 in 2009. The 5 percent drop in entertainment spending was driven by decreases in audio and visual equipment and services purchases (down 5.9 percent) and recreational supplies, equipment, and services (down 16.5 percent), such as recreational vehicles, boats, sporting goods, and photographic equipment. “These items tend to be discretionary purchases and the decrease may reflect the difficult economic conditions,” according to the BLS report. Americans also cut spending on reading materials by 5.2 percent.

[See Make the Most of Your Retirement Account Options.]

Meals out. Spending on food away from home declined by 2.9 percent from $2,698 in 2008 to $2,619 in 2009. Costs for meals at home remained about the same as last year, although many households cut back on dairy products (down 5.6 percent).

Alcohol. Americans reduced spending on alcoholic beverages by 2 percent, spending an average of $9 less per household in 2009 than 2008.

Apparel and services. The proportion of spending dedicated to apparel and services declined by 4.2 percent in 2009, and hit a record low share of the household budget. “These declines on apparel spending were influenced by the faltering economy of the past 2 years, but a prevailing trend of decreases in apparel spending in the United States has emerged when measured as a share of the household budget,” according to the BLS report. Spending on men’s apparel dropped 10.3 percent, while women’s apparel spending fell by 5.6 percent. There was also a 3.2 percent decline in spending on personal care products and services.

[See 6 Numbers Every Investor Should Follow.]

Retirement saving. Workers reduced their pension and Social Security contributions by 2.4 percent to an average of $5,162 in 2009. Mid-career workers between ages 45 and 54 saved the most for retirement, averaging $7,226 in 2009. Those on the verge of retirement between ages 55 and 64 saved an average of $6,347.

Twitter: @aiming2retire

Usually about the time you start to think seriously about saving for your retirement, you’re also facing the reality of helping your kids finance their education. You can aim to do both, but don’t forsake your retirement livelihood to give your child a debt-free college experience. Retirement savings should always come before your kid’s college needs. Here is how you can help finance your child’s education without hurting your retirement finances.

[See 50 Best Funds for the Everyday Investor.]

Understand what it takes to retire. Figure out how much money it is going to take for you to retire. Quit guessing about your retirement needs and do the calculation. If you can determine how much you need to put away each year to retire comfortably, then you can figure out what you will have left over in your budget for your kids.

Set up a 529 college savings plan. Sometimes just having a place for the money will be enough encouragement to build up some savings over 18 years. When my daughters were born, as soon as I got their Social Security numbers, I opened up a 529 college savings plan in their names. By having one of these tax-advantaged accounts at my disposal, I always know where to put extra money that trickles in from various places. Having the account also allows me to put small amounts into the account regularly. I’m starting with $25 a month, and I’m working my way up from there.

[See Make the Most of Your Retirement Account Options.]

Encourage college fund contributions instead of gifts. When your kids are first born, your friends and relatives will be prone to give you gifts or even money for your newborn. Take advantage of this money and stash it away for their college savings instead of blowing it on extras for your child. Consider asking your close relatives to contribute to an education fund for a first birthday gift.

Funnel found money into college savings. Make retirement account contributions from the income from your main job. Then put found money towards your kid’s education. Found money can be from things you sell, extra jobs you perform, a tax refund, or literally found money in an old savings account. Make college savings the default place to stash all the extra money that comes in over the years.

Assist your kids with their homework. If you can’t invest for your children’s education, you can at least invest in them. Spending time helping your kids with their homework and assignments could help them to win scholarships to college based on their academic performance.

[See 6 Numbers Every Investor Should Follow.]

Help your kids apply for scholarships and grants. One of the best ways to help your kids is to assist them with the financial aid submission process. Invest your free time to help them fill out the applications for scholarships and grants and help manage the process. Also, if they end up needing a student loan, make sure you educate them on what it means to borrow that much money and help them develop a realistic plan to repay it.

Push your kids toward an affordable education. Look into community and public colleges and encourage your child to get a part-time job while in school. Education after high school doesn’t have to be expensive.

Philip Taylor is the author of 104 Ways to Save Extra Money. Read his popular blog, PT Money: Personal Finance for more insightful money tips, like his recent suggestions for the best online checking accounts.

Andrew G. Rosen

Despite the increasing volume of electronic communications in the workplace, most offices are still overrun with paper. Request forms, applications, interoffice mail, and other documents are circulated daily, which means most desk dwellers have an inbox. That’s right, a physical inbox.

But anyone who has spent an hour at a desk knows that the Laws of the Inbox are often violated—and that the “green office” is mostly a myth. Documents are left on chairs, taped to monitors, or worse yet, tossed onto our already crowded desks.

If you’re new to office culture, in need of a refresher course, or an admitted inbox violator, let these rules serve as a guide to make work a better place:

[See How to Avoid 7 Common On-the-Job Office Mistakes.]

Keep Your Inbox Neat. Letting too much paper accumulate in your inbox will worry the sender that leaving something behind will lack priority, or worse yet, fall into a black hole. Many productivity pros advise limiting the number of times you check your email each day, and the same principle can be applied to your inbox. Checking too frequently wastes time. Also, refrain from constantly removing contents. Leaving a few papers behind can send a message that you’re busy tackling other work.

Give Instructions. If you know someone will be delivering paperwork, be sure to mention that if you’re not at your desk, they should leave any documents in your inbox. You should be descriptive, detailing where the inbox is and what it looks like, for example, “If I’m not at my desk, please leave the memo in the black inbox on the left-side of my desk.” It sounds ridiculous that you have to “sell” people on where to leave papers, but let’s be honest: the people you work with are probably not as smart as you.

Don’t Lose the Small Stuff. Small items such as business cards or photos should be placed in a folder (secured with a binder clip) or stapled to a standard size piece of paper. Few people reach to the bottom of their inbox, and convincing your office manager to order you a clear one is not a battle worth having.

[See 7 Ways to Make a Difference on the Job.]

Deliver Rush Mail in Person. Intelligent workers know to check their inbox regularly, and if you leave a document, they will receive it. You might be asking yourself, what if the item is a rush or a priority? If a follow-up is necessary, do so via phone or by paying another visit later. In fact, if it’s important, or if the documents are sensitive, they should be hand delivered at a later time.

Use the Inbox for Yourself. Upon leaving work, consider leaving yourself a brief note that will wait for pickup until the next day. It could be a work related reminder or a positive affirmation. The physical inbox is often the first thing we see in the morning, so consider using it to start your day off on the right foot.

People can talk all they want about saving trees. The reality is, we are far from the (mainstream) paperless office. So for the foreseeable future, do your duty and respect the inbox.

What other inbox laws would you like to establish?

Andrew G. Rosen is the founder and editor of Jobacle.com, a career advice blog. He is also the author of How to Quit Your Job and an established freelance blogger who is available for hire. Follow him on Twitter (@jobacle) or connect on LinkedIn.

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Be unique with your resume. But remember: Even if you go the creative route, content still counts.

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Tim Tyrell-Smith

If you’re smart about how you use them, social media sites can be a purposeful place to learn during a job search, network, and identify job leads. Using tools like Twitter can help you highlight new ideas, engage people in conversation, and help others.

Twitter chats, or live conversations via Twitter that last about an hour, are one effective way to connect with others. Participants use and follow a specific hashtag, a unique word with a # in front. Including the hashtag in your tweet allows everyone following that hashtag to see your contribution, rather than just the people who follow you.

[See How to Use Twitter to Change Careers.]

To give you a proper introduction to Twitter chats, I reached out to three people who co-moderate some of the best Twitter chats for job search and career help. Here are their chats:

#jobhuntchat (Mondays, 10:00 PM, ET): Created by Rich DeMatteo (@cornonthejob), co-founded by Jessica Miller-Merrill (@blogging4jobs) and also moderated by Kate-Madonna Hindes (@girlmeetsgeek).

#HFChat (Fridays, 12:00 PM, ET): Created by Margo Rose (@HRMargo) and moderated with help from Tom Bolt (@tombolt), Cyndy Trivella (@CyndyTrivella) and Steve Levy (@levyrecruits).

#careerchat (Tuesdays, 1:00 PM, ET): Co-created and moderated by Amanda Guralski (@bizMebizgal) and Jill Perlberg (@MyPath_MP).

Below is the advice from my interviews with Jessica of #jobhuntchat, Tom of #HFChat and Amanda of #careerchat on how to get the most out of a Twitter chat:

Twitter chats have been described as “sucking on a fire hose” for new participants because so much information comes so quickly. Do you have any helpful tips for new participants?

Jessica: Do your best to follow, but the networking and relationships you build are just as important. Connect with the people who participate in the chat that can best help you.

Tom: Not all Twitter chats have the pace of #HFChat, but ours is like speed dating on steroids. I post a transcript of the chat session on the #HireFriday web site so users can review the conversation at a more leisurely pace.

Amanda: The biggest thing is to stay engaged in the conversation that you find the most beneficial to you. There will be multiple conversations going on at one time, you just need to pick and choose what makes the most sense.

All three of these moderators highly recommend the use of a Twitter tool like Tweetchat, TweetGrid, or Hootsuite to allow easier following of the hashtag. They also recommended using searchtwitter.com to follow the hashtag after the chat so you can review ideas, links, and conversation at a more leisurely pace.

[See 10 Smart Ways to Use Social Media in Your Job Search.]

What’s the main reason a job seeker would want to spend an hour in your chat?

Jessica: Networking is the number one reason. These are great times to learn tips and develop relationships with online social media connectors.

Tom: For job seekers, there’s a wealth of information provided by the experts who volunteer to show up to help out. Obviously recruiters can make useful contacts as well, but mostly it’s just caring people, lending a helping hand. In this economy, this is important.

Amanda: We talk about the things that are happening all around us that no one wants to talk about. We cover corporate politics, looking for a job when you have one, work place romance, bullying bosses, etc. Our participants get heart-felt advice to truly help them be successful.

How is your chat formatted? Do you always have a guest host?

Jessica: We rarely have a guest host but are looking to expand our format to offer different opportunities for experts, service providers to connect on various topics. We’re open to the opportunity.

Tom: Most weeks there’s a guest host from the ranks of key opinion leaders in the Recruiting, coaching or HR fields. These, too, are volunteers who receive no compensation for their time other than to publicize their company or a book they have written.

Amanda: We typically ask three questions (one every 15 minutes) to structure the chat a bit and then the leave the last 15 minutes for open QA. We have had guest hosts in the past, but typically it’s just Jill and me.

[See How to Mesh In-Person and Online Networking.]

Who benefits most from your chat? Can you describe your average participant (job seekers, career experts, recruiters)?

Jessica: This chat is driven for job seekers. Our chat has been going strong for a year and 5 months. It’s amazing how time flies and how many job seekers we have helped land a job opportunity with #jobhuntchat.

Tom: Participants are generally divided equally between job seekers and job helpers, but a recent survey of participants showed that 35% of those attending the chat session were currently unemployed.

Amanda: Anyone looking to get ahead in a career. We have a variety of participants from job seekers, recruiters, and career experts. That’s the biggest benefit: our job seekers learn from experts and our experts are able to showcase their expertise in a non-sales format.

If you’re a Twitter chat veteran, what are your tips for getting the most out of a live chat?

Tim Tyrell-Smith is founder of Tim’s Strategy, a site that helps professionals succeed in job search, career and life strategy. Follow Tim on Twitter, @TimsStrategy, and learn about his two popular job-search books.

We’ve all heard the standard personal finance fare about saving more and spending less, repeated ad nauseum, so we were pleasantly surprised when five original money strategies floated across our radar recently. They are extreme, and not for everybody, which is why they’re not on the lips of every finance guru out there. But for some people, they might just work.

[In Pictures: 10 Affordable Spots for Summer Vacation]

1. Buy a vacation home as soon as possible.

Casey Weade, a vice president of Howard Bailey Financial and a certified financial planner, says young people in their twenties and thirties should not only buy a first home, but should also consider buying a second home. As long as a young person is otherwise debt-free and on top of their finances, he argues that a second home can serve as a forced savings vehicle, a kid-friendly vacation spot, and a retirement home down the road.

“If you’re in a neat area, then you can rent it when you’re not there and let the place pay for itself,” he says. Weade, who is moving to North Carolina, plans to take his own advice and look for a vacation home near the beach.

The downside: If your expenses go up or you lose your job, a second home is the last thing you want on the books. Also, rental income isn’t guaranteed, and hidden costs from extra insurance to unexpected repairs abound.

2. Take out life insurance on your parents.

After maxing out his Roth IRA, Weade decided to take out a life insurance policy on his father. Then, when his father dies, he will collect the payout. Weade acknowledges this strategy will sound morbid to some, but he insists that it makes sense. “He’s in really good health at 61, and I’m 25. In 30 years, I’ll be 55 and he’ll be over 90, and there’s a low chance of living that long, so I’ll get that tax-free benefit by age 55,” he explains.

Weade calculates that his returns, after paying for the policy, will be at least 10 percent. “You have to be in a great relationship in order to do this. [Parents] have to understand the purpose and why it’s beneficial,” Weade adds.

The downside: If parents outlive a term policy, it may never pay out, and by that time, the insurer might not be willing to re-issue another one, explains Rita Cheng, a financial adviser with Ameriprise. (Some term insurance policies are convertible, she adds, which means they can be converted to cash value or a permanent policy prior to the end of the term.) Cheng says she doesn’t usually suggest that people take out life insurance policies on their parents, but in some cases, life insurance policies that are structured properly can be a tax-efficient way to pass on wealth from parents to children.

3. Open up an extra credit card account.

People who take the “credit cards are evil” message to heart can find themselves in trouble when they want to borrow money for a house or car, since lenders want to see some experience with credit. Opening up credit card accounts and paying them off on time each month can help build a solid credit history and avoid that predicament. That way, when you need to take out a big loan for a house or a car, lenders will be competing for your business. (Other ways to build credit include opening utility accounts in your own name. Becoming an authorized user on accounts owned by others, such as spouses or parents, can also help.) Multiple accounts also provide an extra buffer in case of accidental account freezes, lost cards, and other problems.

The downside: If an extra credit card serves as a temptation to spend more, it can lead to a debt snowball effect.

[In Pictures: 10 Smart Ways to Improve Your Budget.]

4. Overpay the IRS.

Most Americans make the mistake of overpaying the IRS throughout the year. Many financial experts point out that anyone who does this is floating Uncle Sam a loan free of charge. But is doing so really a mistake? Getting a tax refund every April can serve as a method of forced savings (or splurging, depending on one’s priorities).

Despite the bevy of disappointing economic reports recently, the U.S. economy might be better off than you think.

To be sure, there’s no shortage of reasons to fret. May’s dismal unemployment numbers took the teeth out of an improving job-market outlook, and debt problems in Europe continue to rattle investors worldwide. Add abnormally bad weather around the globe and supply-chain disruptions in Japan that slammed the American auto industry last month, and it all amounts to an economic “soft patch” that feels more like a hard landing.

[See 12 Ways To Stop America's Decline.]

While those “temporary forces” comprise a seemingly endless catalogue of challenges facing the U.S. economy, the data tell a different story: The economy has indeed hit a road bump, but there are still plenty of bright spots hiding amid all the “soft patch” angst:

Job creation has nearly doubled. After several months of encouraging gains, the economy added just 54,000 jobs in May, falling well short of the 170,000 economists had predicted. The short-term outlook leaves little in the way of a silver lining, but the pace of job creation so far in 2011 is nearly double what it was in 2010.

That may be little consolation for the nearly 14 million Americans who are still unemployed, but economists remain optimistic that job creation will pick up again as the impact of temporary economic disruptions diminish.

“More than two million people are now employed versus a year ago. It’s a step in the right direction,” says Jeffrey Cleveland, senior economist at Payden Rygel. “April probably was a little exaggerated with more than 250,000 [jobs added], so that was probably overestimating the actual trend, and May was the payback. If you look [at] the three-month average, you get a better sense. We’re somewhere between 100,000 and 150,000 jobs being created every month.”

[See How the Greek Crisis Affects Your Portfolio.]

Small businesses have been the main driver of job growth, hiring more than a million people over the last 12 months. “Small businesses are pretty much the U.S. employment picture,” Cleveland says. “Most of the U.S. economy is made up of small businesses, and they’ve been a big contributor to net job gains over the last 20 years, so that’s a really good sign that they’re hiring back and moving along.”

Credit availability is improving. “An important missing component of the current recovery—borrowing and lending—has also recently emerged,” says Paulsen, a factor economists say is crucial to lift the economy out of the doldrums. While corporations remain hesitant and cautious on the whole, short-term borrowing has been rising steadily since November, a sign that confidence might be building among businesses.

“Credit recovery has taken awhile in the last three recoveries, including this one,” Paulsen says. “Last year there was no evidence of banks making loans, they were still going down, [but] this year now we now see some evidence of it picking up.”

[See Breaking Down the Debt-Ceiling Debate.]

Business lending has ticked up at a 9 percent annualized rate in 2011, according to the Federal Reserve. “That certainly shows a change in propensity among businesses to step up and start borrowing money,” he adds. “That’s a real difference from last year.”

Consumers are also feeling a bit more comfortable using credit. After declining continuously from its January 2009 peak, consumer credit has been on the upswing for seven straight months. While that doesn’t amount to anything close to a credit boom, economists say the turn is significant. “While people are worried about Greece and this soft patch, what we’ve done is double job creation and started some credit creation,” Paulsen says. “Those are huge events.”

Kelly Campbell

People experience inflation—or an increase in the price of goods and services—in a number of ways. First, it has helped investment portfolios in areas like big oil. As oil prices increase, so do the profits of companies like Exxon. If you’ve had a position in a commodity exchange-traded fund (ETF) or mutual fund than you have been pleasantly surprised by their increase over the last year.

However, inflation can cause significant issues for people trying to put food on their table.

[See 50 Best Funds for the Everyday Investor.]

[See Use Conservative Estimates When Planning for Retirement.]

Lower-income households experience even greater difficulties in times of high inflation. Think of it this way: As food costs rise, it takes up a greater percentage of your income. The less you make, the greater the percentage your food budget becomes. While you can change your habits and spend less money in some areas, you always have to eat.

The world’s poor are being pushed further and further into poverty. In the U.S., the average family spends 7 percent of their income on food. In Guatemala, it’s 36 percent, and in Kenya, it’s 45 percent. Quite simply, the less you make, the more an increase in food prices will hurt you financially.

[See Is Gold the Best Inflation Hedge?]

According to the Bureau of Labor Statistics, an American family making $15,000 to $20,000 of annual income spends 19.1 percent of their income on food, while those making $80,000 to $100,000 spends 9.4 percent.

But there may be a light at the end of the tunnel for lower income families. According to the FAO Food Price Index, food prices may have hit their high and could be on their way down.

If commodity prices have hit their high, the tables may be turning. Consumers may be seeing some relief, but investors could end up giving up some of those great returns. So for investors, here are two tips that could help you to hold on to your returns:

[See 6 Investing Mistakes to Avoid.]

Use a long/short commodities fund. Managers can hold on to commodities he or she thinks could be increasing, and make money on those that could be decreasing in price.

Rebalance your portfolio. When any portfolio sector gets too high, take some of your gains off the table. Also, when you rebalance, you are selling something that did well (at a high) and buying something that did not do as well (at a low).

Good luck and happy investing.

Kelly Campbell , CFP® and Accredited Investment Fiduciary, is founder of Campbell Wealth Management, a Registered Investment Advisor in Alexandria, Va. Campbell is also the author of Fire Your Broker , a controversial look at the broker industry written as an empathetic response to the trials and tribulations many investors have faced as the stock market cratered and their advisers abandoned their responsibilities to help them weather the storm.

The recession may have officially ended two years ago, but unemployment is still painfully high, and the squeeze on small businesses might be to blame.

Historically, small businesses have led the country out of recessions, generating nearly 65 percent of net new private-sector jobs over the past decade, according to the Small Business Administration.

[See How 15 U.S. Firms Depend on Foreign Sales.]

This year, the private sector has added about 200,000 jobs a month on average, but economists say businesses need to add somewhere between 350,000 to 400,000 jobs each month over the next three years to bring unemployment down to a more normalized level of around 6 percent.

Without a boost in hiring from small businesses, that goal may remain out of reach and prolong an economic recovery that’s already been painfully slow. “When you’re not feeding the economy with smaller-business growth, that’s really a danger,” says Doug Arms, senior vice president at Ajilon, a professional staffing firm. “When you have your small businesses contributing, en masse it really does spark the economy.”

Particularly troubling is the large drop-off in the number of start-ups since the beginning of the recession. The number of new establishments for the year ending in March 2010 was lower than any year since the Bureau of Labor Statistics began collecting the data in 1994, a worrying trend that has put a significant dent in job creation. Jobs created by start-ups sank to just under 2.5 million in 2010, down from a peak of 4.7 million in 1999.

[See 4 Bright Spots for the U.S. Economy.]

“The shortfall in this job market in this recovery is [because] small business formation has been very weak. I think that’s the key problem,” says Mark Zandi, chief economist at Moody’s Analytics.

Stagnant consumer spending and tight credit have also put financial pressure on small businesses. While experts say credit markets aren’t as tight as they were a year ago, getting a loan is still tough. That’s especially true against the grim backdrop of the housing slump, given that many small business owners rely on home equity as collateral for loans.

“You need capital and credit to grow or start up [a small business],” says Steve Smits, associate administrator in the Small Business Administration’s Office of Capital Access. The agency has tried to bridge the gap in lending by offering loan guarantees to banks that lend to small businesses, facilitating more than $42 billion in financing since February 2009. “Lenders are eventually going to need to lend. They are looking for ways to say ‘yes,’ [and] the credit enhancements is a way to get you a ‘yes.’ It’s a crutch,” he adds.

[See Why Europe's Debt Crisis Will Keep Coming Back.]

But it’s not just a matter of encouraging banks to lend, it’s nudging small businesses to borrow and invest in their companies, too. That’s been a tough sell lately as confidence in the economy among small-business owners has sunk to its lowest level since September, primarily due to low consumer demand and poor sales. “Those challenges translate into a continued decline in confidence,” Smits adds. “There’s a pullback. You go into survival mode.”

Heather R. Huhman

Ever think about seeking out a mentor? It may sound like an outdated business strategy, but a mentor can be a great resource, especially if you find one who has navigated your industry before and has ample experience. This individual is a prime source of support, constructive criticism, and unbiased advice when it comes to your job opportunities, workplace conflicts, and much more.

Here are some ways to find the right mentor for you:

• Look for someone in your same (or a similar) field or industry. If you’re looking to break into another industry, find a mentor who already works in your desired field.

[See 10 Tips for Getting the Most Out of Your Internship.]

• Look for someone with goals similar to your own.

• Take the initiative to contact the individual, as you’ll benefit the most from the relationship. (Although, don’t think that your potential mentor won’t benefit at all—they will.)

• Be prepared to dedicate time towards the relationship, as not much is gained from a relationship with little effort and time put into it.

Having a mentor is a great way to truly excel in your chosen career path. How? Here are several ways you can benefit from a mentor relationship:

• Learn from an experienced professional. A mentor has worked in your industry before and can show you the ropes. They can provide wisdom about workplaces issues and career challenges and help you look at things in a new light.

• Receive guidance, advice, and challenges. A mentor can help you navigate your career and job search by giving you advice and guidance based on their past experiences.

[See How to Successfully Change Careers.]

• Gain an unbiased opinion on issues and problems. Ever feel like you can’t solve a problem when you’re too close to the source? A mentor is a great third-party resource to turn to when you’re stuck on a project, having a conflict with a superior or co-worker, or facing a hurdle in your career.

• Clarify your ideas and goals. A mentor helps you solidify your ideas and goals by talking through them out loud. You’re also more prone to follow through with goals when you’ve shared them with someone who will hold you accountable.

• Develop your critical thinking skills. A mentor will help you look at projects and issues in a new way. They will challenge you to think about your current job, job search, and career.

Don’t know how you’ll find a mentor in your chosen field? Consider going virtual in your search. For example, StudentMentor.org is a non-profit organization matching college and graduate students seeking career or academic advice with professionals across the nation.

Do you have a mentor? What have you gained from a mentor relationship? If you don’t have one, do you hope to in the future?

Heather R. Huhman is a career expert, experienced hiring manager, and founder president of Come Recommended, a content marketing consultancy for organizations with products that target job seekers and employers. She is also the author of Lies, Damned Lies Internships (2011) and #ENTRYLEVELtweet: Taking Your Career from Classroom to Cubicle (2010) and writes career and recruiting advice for numerous outlets.

Tim MicKey

In a headline-driven environment, it’s easy to get confused about which way the market is moving. Let’s put aside the calamities of the day and focus on the fundamentals of “the market,” as defined by the Standard and Poor’s 500 Index (SP 500). The SP 500, which includes the 500 largest companies in the U.S., represents more than 80 percent of the U.S. stock market and is widely regarded as the best single gauge of the U.S. stock market.

Two powerful measurements for determining stock valuations are price-to-earnings ratio (P/E) and earnings yield (E/P). In fact, earnings and earnings estimates have more to do with the movement of stock prices than any other measure. In 2010, the earnings for the SP 500 came in at $83.77. According to Standard Poor’s, the earnings estimates for 2011 are at $97.81 and $111.73 for 2012. Both are at historic highs and have been revised upwards in the past six months. Assuming that these estimates hold, we can use this data to compare our current findings against historical results.

[See 50 Best Funds for the Everyday Investor.]

The P/E ratios of the SP 500 from 1988 to today range from a high of 29.44 in the fourth quarter of 2001 to a low of 11.51 posted in the fourth quarter of 1988. Eliminate the extremes, and you come away with averages that fall between 13x and 16x earnings. As of July 1, 2011, the SP 500′s current P/E is 13.65 (using the SP 500 July 1 price of 1335 and a 2011 earnings estimate of $97.81). If you use the 2012 earnings estimate, you end up at 11.95x earnings. As you can see, we are much closer to the historical low end than the high end whether we use the 2011 or 2012 estimates—which indicates that the markets are on the undervalued side and have significant room for growth.

Now, let’s take a look at earnings yield, which is defined as earnings/price. If we use the same 2011 SP 500 earnings estimate of $97.81 and an SP price of 1335 (97.81/1335), you come away with a multiple of .073 or 7.3 percent. Simply put, this means that the expected earnings of the SP 500 are 7.3 percent of the price of the index. Why is this relevant? Because we are comparing the additional rate of return we expect to receive by investing in equities with the anticipated rate of return offered by other asset classes.

[See 5 Items for Your Mid-Year Financial Check-Up.]

We can also compare these returns to the rate of inflation. Over the past 50 years, the average earnings yield for the SP 500 has outpaced inflation by 2.4 percent. When the market is above that mark, equities are generally considered attractive. When below that mark, stocks may be considered expensive. If we subtract the current core inflation rate of 1.5 percent from the 2011 SP 500 earnings estimate of 7.3 percent, we end up with 5.8 percent—well above the 50-year 2.4 percent level. Even if we use the 3.4 percent consumer price index rate, we come out at 3.9 percent (7.3 percent minus 3.4 percent), which is still a very attractive number when compared to most interest-bearing investments. A look at history shows that the last time the SP 500 earnings yield approached 7 percent was at the end of 1994. The market enjoyed a nice five-year run from there. While it’s not the perfect indicator, when combined with the P/E ratio, earnings yield can provide a useful point of reference.

[In Pictures: 6 Numbers Every Investor Should Follow.]

Earnings and earnings estimates play an important role in market dynamics. We just finished the second quarter and will soon find out how just how solid those estimates are. If the companies hit their earnings targets that’s good news, but more important is the guidance they give for the future. The markets will put more emphasis on future earnings expectations than how well they did last quarter. That’s history.

Timothy S. MicKey , CFP®, is a managing director and cofounder of Monument Wealth Management in Alexandria, Va., a full-service investment and wealth management firm. Monument Wealth Management is backed by LPL Financial, an independent broker-dealer and Registered Investment Advisor, member FINRA/SIPC. Monument Wealth Management has been featured in several national media sources over the past several years. Follow Tim and Monument Wealth Management on their blog Off The Wall , on Twitter at @MonumentWealth and @TimothySMickey, and on their Facebook page. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for individual. To determine which investment is appropriate please consult your financial advisor prior to investing. All performance references are historical and are not a guarantee of future results. Strategies involving asset allocation and diversification do not ensure a profit or protect against a loss.

During the worst of the downturn, the private sector was hammered with massive job losses, while the public sector held fairly steady. Now, the focus has shifted to public sector cuts that threaten the economic recovery.

[See Public Sector Job Cuts Threaten Recovery.]

Roger Wohlner

With the July 4th weekend come and gone, your thoughts are hopefully turning to a mid-year review of your finances. In doing this review, here are five items to consider:

How are you progressing versus your financial planning goals? Assuming you have a financial plan in place, this is a good point in the year to review your progress toward goals such as retirement and saving for college. If you don’t have a financial plan or if your plan is many years out of date, this is a great time to get one in place.

[See 50 Best Funds for the Everyday Investor.]

Are your investments properly allocated? A key element of your financial plan should be an asset allocation strategy for your investments. As in most years, some investment categories have done well, others not as well. Mid-year is a good time to review your portfolio’s overall allocation and rebalance as needed.

If you are self-employed, have you started a retirement plan for yourself? You work hard to grow your business and serve your clients. There are many options available to you ranging from a Solo 401(k) to many other options. What is best for you will depend in part on factors such as whether or not you have employees, the predictability of your company’s cash flow, and the amount you are willing to contribute. Whichever plan you choose, start a retirement plan for yourself. You deserve it.

Parents of minors, have you made provisions for your children in the event of your death? Do you have a will? Have you selected a guardian for your children in the event of your premature death? Have you selected someone to administer your estate and your assets for the benefit of the children? If not you should consider consulting an estate planning attorney today.

[See Is Gold the Best Inflation Hedge?]

Is it time to finally get the financial planning help you need? Maybe you don’t want to spend the money. Maybe you are convinced you can do this yourself. In reality, ask yourself a few questions:

Do I devote time to my finances and investments on a regular basis?

Does my portfolio consist of a random collection of stocks, mutual funds, and other investments (financial clutter)?

Do you know how much you will need to accumulate for financial goals such as retirement or college?

Do you have a clue how your investments are performing? Do you benchmark your portfolio’s performance? Do you review your investments as a portfolio, or just as individual holdings?

[See 6 Investing Mistakes to Avoid.]

Managing your financial future is critical to meeting your goals, and it isn’t always as easy as it looks. If you don’t like your answers to these questions, consider hiring a fee-only financial adviser to help you.

July 4th has come and gone. Take the time to sit down and take stock of where you are financially at mid-year. It’s easy to put this off, but the rewards of staying on top of your finances can pay off for a lifetime.

Roger Wohlner , CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill. where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. He recently cofounded Retirement Fiduciary Advisors to provide direct investment and retirement planning advice to 401(k) plan participants. Follow Roger on Twitter and LinkedIn.

Miriam Salpeter

Job seekers receive a lot of conflicting messages about how to look for opportunities. Many focus on applying via job boards as a main strategy, while career coaches often encourage them to use networking (or social networking) in lieu of job boards.

However, as Chris Havrilla, a talent acquisition/recruiting consultant who focuses on corporate recruiting strategy, process, and technology, says, it’s a good idea to incorporate searching for and applying for opportunities online as part of a well-rounded approach. “You wouldn’t build a house with just a hammer,” she says, “and you should approach a job search the same way. Some tools will be more valuable and effective than others, but the whole ‘house’ will get built faster and more efficiently if you use a toolkit instead of just one tool.”

[See 11 Insider Tips from the HR Department.]

For job seekers who want to benefit from every online opportunity, Chris provides valuable insights from a recruiter’s perspective. Here are a few excerpts from our conversation:

How should job seekers approach job boards? What don’t job seekers know about how recruiters use job boards that could help them?

There is a lot of talk about job boards being dead—and a lot of people advising both recruiters and candidates not to use them. I look at job boards as just another tool in your toolkit. Should it be the only one? Certainly not. Some of the strongest recruiters and sourcers I know can find gold in resume databases—whether they identify active candidates, already motivated to make a job change, or passive candidates who opted to leave their resumes online from past job searches.

Whether you are passively looking or in the heat of an active search, job boards can be a great resource to see who is hiring now. When you are unemployed, time is usually of the essence —go ahead and apply via whatever means you are comfortable. Then, tap your network for contacts in those companies to follow up and move things forward.

Once you identify open opportunities, conduct additional research and focus on a methodical targeted job search: find potential employers, leads, and unadvertised opportunities. Structure your day around managing your active job leads/interview processes, doing follow up, working your network, continuing research, and making new contacts.

[See The Best Way to Take Control of Your Job Hunt.]

Is it effective to find jobs via job boards and then look for other ways to apply?

There are many mixed opinions on this issue. When a candidate applies from a job board, there are some recruiters who are thrilled to see their investment posting the job was spent wisely. There are those who believe candidates who apply via job boards may be desperate for a job. It is important to remember, passive candidates (those not actively looking) are not the only quality candidates. Good recruiters and hiring managers know not to judge the applicant – they know their companies, teams, and jobs well enough to determine a quality candidate, no matter the source of the applicant.

I would look at each method of application on a case-by-case basis. If you know someone in an organization, contact him or her directly to see if you may be able to be referred, and ask, what’s the best process to apply as a referral? If you do not have a contact, decide which way you are most comfortable applying, through the board or directly at the company website. Just be sure to follow up, using your network and research (with tools like LinkedIn) to find people within the organization.

What’s appropriate follow up for a job seeker submitting to a job board? What’s fair to expect from the recruiter?

If you are truly qualified for the role, I would follow up within a 24-48 hours to reiterate your interest in the role. Most candidates do not take this second step; this will help you stand out, ensure your credentials are reviewed in a timely manner, and demonstrate your enthusiasm for the position and the company. My goal as a recruiter is to follow up with an applicant within 24-48 hours. Remember, many recruiters carry requisition loads making that kind of turnaround impossible; I would say a week is still reasonable. As a candidate, remember to follow up within reason, put yourself in a recruiter’s shoes and recognize everyone is doing their best.

Can you give any clues to mastering the applicant tracking system (ATS) that screens resumes electronically? How can job seekers make sure (if they’re qualified) they get through the process? Any generic do or don’ts?

Most ATS’s use logic to help prioritize the resumes from strongest fit and relevance. Whether you have a resume on your own personal website, in a company’s ATS, an external resume database, or a social or professional networking site, make it easy for recruiters and sourcers seeking your kind of talent to find you. Based on the type of jobs you seek, identify key words or titles they use to find you and incorporate them in your materials.

[See When Using Job Boards, It Pays to Go Niche.]

Other suggestions to consider:

 • Do apply to jobs for which you are reasonably qualified.

• Do review the job description and tailor your resume to the job using those keywords.

• Do also tailor your resume to show accomplishments demonstrating how your experience and results relate to the company’s needs.

• Do follow up via email and/or phone call (I prefer a call myself) as described above.

• Do not stalk the recruiter or hiring Manager. Be respectful of their time as well.

What myths can you bust about job boards and how recruiters use them?

Make no mistake about it, job boards are not dead; plenty of candidates, recruiters, and companies use them. Recruiters rely less on them because there are many other tools at their fingertips. This is healthy; recruiters and candidates alike have many options to find each other. I believe, like candidates, not all recruiters use job boards the same way. Some use them to post and market jobs, some to source active candidates (who recently applied) for current open positions, some to do deep sourcing or “database mining” for candidates fitting profiles they seek, and some use a combination of approaches. Effective recruiters do not just post a job and pray for results as their only method, and effective candidates should also avoid the post-and-pray approach.

[See How to Mesh In-Person and Online Networking.]

What steps do you take when you have a position to fill?

A position opens and I posted it internally and externally (via the career site, job boards, as well as my network, often with the help of the social tools I use). Then, I run a search of my database(s)/pipeline, emailing those appropriate with a call to action to check out the new job and apply if interested. Many recruiters do not have the luxury of time to fill their positions. These actions are a quick way to capture the attention of internal and active candidates, who are interested in your company and may already be motivated to make a change.

Applicants come to me via the application process, and with those wheels in motion, I start the more methodical candidate search: finding potential candidates, leads, and passive candidates from research and my network. Much of my day would then center around managing my active, qualified candidates coming in or already in process, working my network, sourcing and wooing passive candidates, and continuing to make new contacts, etc.

It’s always useful having a perspective from the hiring side. In my book, I highlight how to look for and use job boards well and offer a variety of resources to help identify jobs online. Follow Chris’ advice: incorporate job boards into your strategy, but don’t put all of your job hunting eggs in one basket if you want achieve your goals quickly and efficiently.

Miriam Salpeter is a job search and social media consultant, career coach, author, speaker, resume writer and owner of Keppie Careers. She is author of Social Networking for Career Success. Miriam teaches job seekers and entrepreneurs how to incorporate social media tools along with traditional strategies to empower their success. Connect with her via Twitter @Keppie_Careers.

The cost-of-living is one important consideration when trying to identify the ideal place to retire overseas. However, it’s hardly the only criteria you should use.

[See 10 Tips for Retirement Overseas.]

There are many other ways to save money abroad including tax perks, special benefits for foreign retirees, and even the affordability of health care. And in addition to the local cost-of-living, you should also consider the climate, infrastructure, culture, and recreation opportunities of each potential retirement spot. If you plan to return home periodically, accessibility to the U.S. is also key.

Different retirement havens are appealing for different reasons. While many places could make an ideal adopted retirement home, no single place is right for everyone. Making the right choice for you is about understanding the pluses and the minuses of a place and making comparisons. Some places offer better weather, while others provide more options for outdoor recreation, are nearer to your home town, or have better public transportation systems.

[See The 10 Fastest-Growing Retirement Spots.]

The following chart shows how twelve retirement havens compare on criteria that is important to many retirees, with five stars being the highest possible rating. For example, five stars in the climate category means that the country’s weather is pretty nice year-round. One star in the special benefits for foreign retirees category indicates that the country offers few extras, such as tax breaks or travel discounts, to retirees from abroad. Four or five stars in the language category means that a person who speaks English only could live here and get along day-to-day without learning another language if they wanted to.

[See 10 Places to Retire on Social Security Alone.]

Creating a chart like this one necessitates drawing broad conclusions across different regions of a country. The weather in Ajijic, Mexico, for example, is dramatically different from that on the Mexican Pacific coast at Puerto Vallarta. Therefore, these ratings should only be used for making comparisons and prompting your thinking about where in the world might be the ideal retirement haven for you. Visiting for yourself is the only way to know if any of these places will suit your retirement needs.

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

Becoming wealthy by the time we retire is a goal many people strive for. But due to the scarcity of time, few of us ever achieve this feat. Our children, however, have plenty of time to let compound interest help their money grow. And parents can significantly increase the chances that their children will become wealthy in their lifetime. Here are five ways to help your children build wealth.

[See 50 Best Funds for the Everyday Investor.]

Develop frugal habits yourself. It’s not enough to tell your kids what to do, because they will emulate what you do. If you are frugal, you will not only become financially free yourself, but your actions will also teach your kids the freedom that comes with not spending excessively. Any inheritance you leave them as a result of your frugal habits is an added bonus.

Fund a Roth IRA for your children. Many of us wish we had started saving for retirement years before we actually did. Yet, seldom do I hear of people helping their kids start early by funding a Roth IRA for them. As soon as children have earned income (part-time work counts), why not help them get tax-free growth for the rest of their life? Even $1,000 could turn into a million dollars if we give it enough time to grow.

[See Make the Most of Your Retirement Account Options.]

Teach them the excitement of improvement. There are always better ways to make our money work for us and to waste less money. We can look for a better deal on our next trip, negotiate our monthly bills, or find better interest rates on our accounts. Teach your kids the art of continuous improvement so they can keep making their finances more efficient.

Fund a 529 account, and help your kids get out of college debt free. On average, a college graduate earns more than those who don’t hold the same degree. At the very least, a college degree provides more career choices for your kids, increasing their chances of having a satisfying career. But graduating with five or even six figures of debt puts a huge burden on a young graduate, which will affect the choices that he or she makes down the road. Help your children complete schooling without taking on debt so they can begin to build a future right after college.

[See 6 Numbers Every Investor Should Follow.]

Help nurture a drive for achieving in life. Most self-made wealthy people made their millions from months and years of earning much more than they spend. Whether it’s through a business or successful career, the drive and willingness to work hard comes from within. You should do everything you can to help, nurture, teach, and encourage such behavior. Unless you are extremely wealthy and a huge estate is already waiting for your heirs, the best way to help your children to be financially successful is to teach them how to build wealth.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.

Generous employer matches, broad and often imaginative investment choices, and low fees are the common attributes of the nation’s most attractive 401(k) plans, according to rankings from BrightScope, a firm that tracks the performance of more than 50,000 retirement plans which it says contain 90 percent of all retirement plan assets. The top 10 plans BrightScope identified for U.S. News had to have assets exceeding $1 billion to be included in the ranking.

[See 50 Best Funds for the Everyday Investor.]

BrightScope identifies six primary factors in its comparative evaluations of retirement plans: total plan costs, employer generosity, investment menu quality, employee participation rate, the average amount of employee contributions or salary deferrals, and the average size of employee account balances.

[See Make the Most of Your Retirement Account Options.]

Bayer Corp., which ranks sixth on the BrightScope list, “made no changes [to the plan] during the roller-coaster cycle of the economy,” says Susan Murphy, Bayer’s director of retirement planning.

Bayer matches employee contributions dollar-for-dollar for the first 2 percent of payroll, and 50 cents on the dollar for the next 4 percent. While the company does not offer matching contributions beyond 6 percent of payroll, Murphy says the average rate of employee contribution is 10 percent of salary.

This may be partly because Bayer has an aging workforce. The average age of the plan’s roughly 20,000 participants (88 percent of all employees) is between 50 and 54, she says.

Another clear appeal of the plan stems from Bayer’s decision to freeze its big, traditional, defined-benefit pension plan at the end of 2005. To help compensate for the loss of that benefit, Murphy explained, Bayer contributes an additional 5 percent of each employee’s compensation into their 401(k) plan.

The plan, which Vanguard advises and helps manage, offers a diversified menu of investment choices. It also includes a program in which Vanguard will actually manage an employee’s investment account. About 15 percent of participants use this managed account option, Murphy estimates.

The top-rated plans on BrightScope’s list tend to include well-compensated workforces and employers in prosperous enterprises. For example, three oil companies made the list. However, Nortel Networks, which ranks ninth on the list, has filed for bankruptcy. “We are in Chapter 11 proceedings at this time,” a company official said via email, “and it would not be appropriate to discuss” the company’s 401(k) plan. BrightScope evaluates the generosity of Nortel’s plan as “great.”

Here is a list of the 10 plans, each plan’s current BrightScope rating, and its total assets as of the end of 2009:

1. The Savings Plan of Saudi Arabian Oil Company: BrightScope ranking of 90.82; net assets $1,388,937,728.

2. Southern California Permanente Medical Group Retirement Plan: ranking of 90.13; net assets $1,691,711,872.

3. Southwest Airlines Pilots’ Retirement Savings Plan: ranking of 89.61; net assets $1,605,461,760.

4. United Airlines Pilots’ Directed Account Plan: ranking of 89.48; net assets $2,833,532,160.

[See 6 Tips for 401(k) Success.]

5. Amgen Retirement and Savings Plan: ranking of 88.83; net assets $2,034,202,368.

6. Bayer Corporation Savings and Retirement Plan: ranking of 87.54; net assets $2,873,252,096.

7. Employees Savings and Retirement Plan of Credit Suisse: ranking of 87.36; net assets $2,181,910,784.

8. BP Employee Savings Plan: ranking of 87.31; net assets $8,229,215,744.

[See 6 Numbers Every Investor Should Follow.]

9. Nortel Networks, Inc. Long-Term Investment Plan: ranking of 87.24; net assets $1,623,474,048.

10. ExxonMobil Savings Plan: ranking of 86.88; net assets $18,138,716,160.

Twitter: @PhilMoeller

Saving enough money to support yourself in retirement isn’t the only retirement challenge you will face. Retirement savers must also manage their investments throughout an unknown number of retirement years. A recent Government Accountability Office report identified strategies to ensure that you will have income throughout retirement. Here is how to prevent outliving your nest egg.

[See 50 Best Funds for the Everyday Investor.]

Systematically draw down your savings. Plan to draw down your retirement savings at an annual rate, such as 4 percent of the initial balance each year, with adjustments for inflation. Using this strategy, an individual with $100,000 saved for retirement could safely spend $4,000 the first year and then increase withdrawals by 3 percent each year, resulting in a $4,502 withdrawal in year 5 of retirement and a $7,014 distribution in year 20.

Annual withdrawals of 3 to 6 percent of the value of your investments in the first year of retirement, with adjustments for inflation in subsequent years, will help ensure that you don’t deplete your savings too quickly, GAO found. The Congressional Research Service estimates that a draw down rate of 4 percent on an investment portfolio with 35 percent in U.S. stocks and 65 percent in corporate bonds would be 89 percent likely to last 35 years or more. However, if you withdraw 6 percent annually, the probably that your money will last 35 years drops to 39 percent. And the historical rates of return used in the analysis are not a guarantee of future investment performance. Also, it’s important to keep an emergency stash of immediately available cash so that unexpected events such as high medical costs don’t disrupt your draw down strategy.

[See Make the Most of Your Retirement Account Options.]

Convert a portion of your savings into an income annuity. An alternative to managing investments and taking periodic distributions from your savings is to use a portion of your nest egg to purchase an immediate annuity from an insurance company, which guarantees income for life. An immediate annuity can protect you from the risks of underperforming investments, outliving your assets, and some annuities also offer inflation protection. However, annuities can be expensive and often come with high fees. The money you use to purchase an annuity will also generally not be available to cover large unplanned expenses or to pass on to children. There’s also the possibility that the insurance company could default on its obligation to make annuity payments.

GAO recommends that a middle class household without a traditional pension that has $191,000 saved for retirement consider using a portion or even as much as half of its financial assets to purchase an inflation-adjusted annuity. At current annuity rates, a $95,500 annuity would provide $355 per month ($4,262 in the first year) until the death of the last surviving spouse, and include annual increases tied to the Consumer Price Index. This immediate annuity provides slightly more money than the annual income provided by a 4 percent draw down strategy, according to GAO calculations.

Avoid lump sum pension payouts. Some employees with traditional pensions get a choice between taking a lump sum or a lifetime retirement income stream. Opting for the monthly payments for life is likely to provide more money over your lifetime than using the lump sum to purchase an annuity from an insurance company outside the plan, GAO found. A traditional pension also significantly reduces your exposure to investment risks and the possibility of outliving your savings. However, most private sector pensions do not provide inflation protection. For example, an income of $1,000 per month in 1980 would have purchasing power closer to $385 a month 30 years later in 2009, GAO found. Retirees with traditional pensions should take care to select investments with some inflation protection outside their retirement plan.

[See 6 Numbers Every Investor Should Follow.]

Delay claiming Social Security benefits. The age you first sign up for Social Security is one of the most important retirement decisions you will make. To get the full amount you are entitled to you will have to wait until your full retirement age, which is typically age 66 or 67 depending on your year of birth. If you sign up earlier your benefits will be reduced. Retirees born in 1943 who claimed Social Security benefits when they turned 62 passed up increases of at least 33 percent in their monthly inflation-adjusted Social Security benefit levels that would have been available to them if they waited until their full retirement age of 66, GAO found. The benefits you are entitled to continue to increase for each month you delay claiming up until age 70.

Delaying Social Security benefits allows individuals to boost their retirement income at a lower cost than purchasing an immediate annuity, GAO found. The money you would forego by waiting until age 66 to claim is less than the amount necessary to purchase an annuity contract that would provide an amount equal to the larger Social Security payments gained by waiting to claim. Social Security payments also provide valuable inflation protection and generally increase each year to keep up with rising costs.

Twitter: @aiming2retire

There’s a lot of bad news spooking investors these days. The possibility of a default by Greece could cause a domino effect that might threaten the euro. Will Italy, Spain, and Portugal be next? The economic recovery at home continues at a sluggish rate. The decline in the housing market seems endless.

[See 50 Best Funds for the Everyday Investor.]

These problems pale in comparison to the inability of our dysfunctional Congress to agree on raising the debt ceiling. If the U.S. defaults on its debt obligations, we are in unchartered territory. The rating agencies warn they will lower the triple A rating they give to U.S. Treasuries. Many people believe a default would trigger another recession and possibly a global depression.

What’s an investor to do? How fortunate we are that the securities industry has a solution to this problem. You can purchase mutual funds that protect you against your worst nightmare. According to an article in The New York Times, billions of dollars are invested in these funds. They work by buying options to sell stock or an index at a price below its current level. If share prices fall, these funds make money.

[See Make the Most of Your Retirement Account Options.]

In an ironic twist, experience with losing money seems to be a big asset for the managers of some of these funds. Boaz Weinstein, who lost more than $1 billion as a trader with Deutsche Bank, has raised $400 million in mostly institutional funds for his new Armageddon fund. Only in the securities industry could this kind of disastrous past performance be marketed as a virtue.

No one knows whether these funds will be good or bad investments. The unpredictability of the stock market is well illustrated by the fact that the DJIA increased by 5.4 percent for the past week, notwithstanding a torrent of bad global economic news. This run-up was contrary to the views of many economists and financial pundits who warned about the possibility of an economic slowdown, or even a double-dip recession, as recently as a month ago.

Long-term historical data indicates that investors who stay the course, investing in a globally diversified portfolio of low management fee index funds in an asset allocation appropriate for them, will do just fine. If you are concerned about the possibility of a global economic disaster, and can’t deal with short-term volatility, it would make far more sense to adjust your asset allocation to a more conservative portfolio, with less exposure to stock market risk.

[See 6 Numbers Every Investor Should Follow.]

Investing in exotic funds with high fees is precisely what the securities industry wants you to do. Encouraging fear and panic generates assets, fees, and commissions for them. It should not be surprising that investing in funds run by managers with experience in losing money is likely to be a losing strategy for you.

Dan Solin is a senior vice president of Index Funds Advisors. He is the author of the New York Times best sellers The Smartest Investment Book You’ll Ever Read, The Smartest 401(k) Book You’ll Ever Read, and The Smartest Retirement Book You’ll Ever Read. His new book, The Smartest Portfolio You’ll Ever Own, will be released in September, 2011.

Curt Rosengren

A career worth having is seldom a just-add-water option. And sometimes that means being confronted with goals that, at first blush, seem impossible. But if there’s one thing I have learned over the years of helping people move out of feeling frustrated and stuck in their work into careers they love, it’s that often, the impossible isn’t really impossible.

[See 10 Tips for Negotiating a Raise.]

That false sense of the impossible is one of the biggest obstacles I encounter. It’s the voice of doubt, and that voice is in the habit of making up its own version of reality. It’s compelling, but it’s not real.

Have you ever looked at something you’d really love to do and thought, “I can’t do that because….?” Whatever the reason you came up with, you could probably replace it with, “I can’t do that because…that’s absurd.” Because to that voice of doubt, following your dreams is absurd.

Why? Because pursuing a dream is inherently about jumping off the treadmill and blazing headlong into the Land Beyond the Rut. That’s unknown territory, and to that voice, the unknown equals danger! And so the safest thing is to make it “impossible” and put a stop to all that nonsense. Of course, sometimes it really is impossible, but often it’s simply a convenient reality that we’ve created in our minds.

A false sense of the impossible limits you and keeps you from reaching your true potential. It creates fake boundaries around who you can be and what you can achieve.

 [See 7 Ways to Make a Difference on the Job.]

I’m not saying, “anything is possible–just do it!” Some things truly are impossible. And some things are possible, but they would require choices and sacrifices that you might not be prepared to make. But a good chunk of the things you think are impossible just might be possible with some creative problem solving.

Next time you catch yourself saying, “I can’t do that because,” stop for a minute and ask yourself if that might just be a false sense of the impossible. Check your assumptions. Any time you hear yourself saying “that’s impossible,” make it standard procedure to get a second opinion. Stop and ask yourself, “Is that really true?” Embrace the absurd, just for a moment, and ask yourself, “So how could I? What are some possible ways to make it happen?” Challenge yourself to come up with five alternative ways to make it happen.

[See 10 Ways to Make Any Job Healthier.]

Make it a habit to exercise your possibility exploration muscle. The potential of second guessing your impossibility assessments is huge. Think about it. Even if we take a conservative estimate and say that 75 percent of the things you think are impossible really are impossible, you have still gained 25 percent more potential and possibility in your career. What difference do you think that could make?

Question impossibility. Not a bad motto to live by.

After years as a professional malcontent, Curt Rosengren discovered the power of passion. As speaker, author, and coach, Rosengren helps people create careers that energize and inspire them. His book, 101 Ways to Get Wild About Work, and his E-book, The Occupational Adventure Guide, offer people tools for turning dreams into reality. Rosengren’s blog, The M.A.P. Maker, explores how to craft a life of meaning, abundance, and passion.

Refinancing a mortgage today is a lot like navigating a minefield. One wrong step and your refinance gets blown to pieces. We just closed on a new loan for our primary residence and are in the process of refinancing a loan on an investment property.

[In Pictures: 10 Affordable Spots for Summer Vacation]

Safeguard your credit score: Your credit score is as important with a refinance as it was with your original loan. The credit score required to refinance a mortgage will vary from program to program. As a rule of thumb, however, a score in the high 700s is necessary to qualify for the lowest rates. As your score dips into the low to mid 600s, qualifying can be difficult. The key is to know your credit score and protect it until you’ve closed on the loan.

Avoid new credit: One way to protect your credit score is to avoid applying for new credit. Whether it is a new credit card, a car loan, or a line of credit, it’s best to hold off on new credit until the refinance closes. Simply applying for new credit can lower your score. It is equally important to pay your current debt on time. Paying a loan even 30 days late can lower your score by more than 100 points.

Be realistic about home values: The single biggest hurdle to refinancing today is home values. A few years ago a ridiculously low appraisal scuttled our first attempt at refinancing our home. It was only after paying off more than $100,000 in a home equity line of credit that we were able to refinance our mortgage earlier this year. While there are no silver bullets, you can appeal the appraisal if you believe it to be in error. If your curious, here are several free websites to check out the value of your home.

Know that loan modifications are a pipe dream: While the government has hyped loan modification programs, the reality is less sanguine. Qualifying for a loan modification is almost like winning the lottery. Just recently Bank of America was named in a class action lawsuit over a loan modification gone wrong. While homeowners should explore every opportunity to lower their mortgage payments, with loan modifications, make sure you know what you are getting into.

 [In Pictures: 10 Smart Ways to Improve Your Budget.]

Avoid cash out refinancing: A cash out refinance is one in which the new loan is more that the existing mortgage balance and closing costs. Homeowners obtain cash out refinancing for many reasons, such as making home improvements and paying off high interest debt. The first problem with a cash out, however, is that interest rates are higher. Second, the loan-to-value ratios typically go up when a cash-out refinance is involved. Under Freddie Mac’s guidelines, for example, the LTV with no cash out can go as high as 95 percent, but only 80 percent if you take cash out. That’s not to say that cash-out is never a good choice. But recognize that it comes with significant downside.

Don’t chase rates: It may be tempting to hold of locking in your rate to see if you can shave an eighth or even a quartern off the rate. The problem with this strategy, however, is that it’s pure gambling. Interest rates can just as easily go up a notch as they can go down. And current refinance mortgage rates are already at historic lows. If you can get a rate that makes refinancing a good deal, why take chances? As they say, one in the hand is worth two in the bush.

DR is the founder of the popular personal finance blog, the Dough Roller, and author of 99 Painless Ways to Save Money.

Mitch Tuchman

You’ve got money to invest. But it seems that once you have a few bucks, everyone wants to put their hand in your pocket—and keep it there—forever! We’re not talking about your loser brother-in-law. We’re talking about real business partners who want big percentages of all your returns.

In the last 80 years, stocks have returned about 10 percent, while bonds have returned about 5 percent. An average balanced portfolio should therefore return around 7.5 percent over a long time period. If you grow your money at 7.5 percent each year, you’ll double your money every 9 to 10 years. Let us call these “returns before advice and taxes.” This is the baseline.

[See 50 Best Funds for the Everyday Investor.]

[See Is Gold the Best Inflation Hedge?]

Smart investors don’t pay much in taxes on their investments because they don’t trade in and out their positions. They spread their money around the world in different types of stocks and bonds in percentages based upon their objectives (called “asset allocation”) using exchange-traded funds (ETFs). They own a core portfolio with most of their net worth consisting of 10 to 15 ETFs to get nearly complete diversity in stocks, real estate, commodities, and bonds. Each ETF represents an entire stock or bond market that is an essential ingredient to a portfolio. They hold these same ETFs forever.

But this is far from “buy and hold.” Over time, the relative proportions of each ETF within the portfolio will need to change. If bonds are up this year and stocks are down, it is critical to trim bond ETFs and add to stock ETFs. People age and should start shifting more of the portfolio into bonds: same ETFs, different weightings.

[See 6 Investing Mistakes to Avoid.]

Here’s where taxes are minimized. After owning a passively managed ETF portfolio for one year, all gains that come from selling the ETFs are taxed at long-term rates. And ETFs have a special tax structure that rarely generates taxable income except for dividends. By trimming and adding, you only incur a small amount of long-term tax, but the gains continue accruing tax-free. The smart investor tinkers around a few times a year, but never “gets in and gets out.”

If you keep Uncle Sam and Wall Street at bay, you can keep most of your returns. If you let them into your portfolio, you may well find yourself half as rich as you could have been.

Mitch Tuchman is CEO and founder of MarketRiders, an online investment advisory and management service helping Americans invest for retirement. MarketRiders gives investors greater peace of mind knowing that they are leveraging the best thinking of Nobel Laureates and the investing methods used by the world’s most elite institutions and wealthiest families. MarketRiders is on the investor’s side, helping reduce investment costs and risks, and increasing retirement savings.

We hear it again and again, that the job market is hot for engineers. Yet while coders and computer-science majors are grinning from ear to ear, you’re probably thinking, So what? What about the rest of us?

Job seekers who aren’t programmers or developers sometimes make the mistake of overlooking technology companies for their next job, but even workers who don’t know how to write code can take advantage of the abundance of jobs in that sector. Because while the demand for engineers grows, fueled by the growing popularity of iPads and smart phones and digital companies, so does the need for support employees to work alongside them.

[See Job Market Sucks? Not for Techies.]

“You don’t have to be a math and science genius to have a really great career in IT,” says Todd Thibodeaux, CEO for CompTIA, the Computing Technology Industry Association. People who work in account management, finance, sales, and human resources, as well as user-experience and user-testing specialists, are also sought-after in the industry.

Marc Garrett, vice president of client services at Intridea, a Washington, D.C.-based company that builds Web and mobile applications, says while his company is always looking to hire developers, the biggest challenge is bringing employees on board who can sell their products and services.

“It’s actually harder to find sales people than developers,” Garrett says. “Sales people in the tech space, they have to know sales but they also have to know the Web.” He expects sales hires to understand industry language and developments, and to “live their life on the Web”—for example, booking tickets and making purchases online rather than over the phone—but they’d don’t need technical skills.

Project-manager positions are also difficult to fill at technology companies, says Alice Hill, managing director of Dice, a job-search community for technology professionals. “People who have really good organizational and project skills, being able to manage deadlines; there are a lot of opportunities for those [people] and they’re really hard people to find.” Hill says she’s also noticed a lot of openings lately for graphic designers and writers who can create Web-friendly content.

[See The 50 Best Careers of 2011.]

Then there are the tech-loving newbies who dabble in HTML and JavaScript but don’t know enough to make the leap into Web development. Good news on that front, too: While most engineers have a degree in computer science or math, many pick up their most valuable knowledge through experience, which can be gained on the job, or, as the Silicon Valley story goes, while experimenting in their garage. In fact, developers who teach themselves programming languages and use them in innovative ways outside of work are often the most sought-after employees, says Chris McCroskey, founder of IdeaLoop, a Dallas-based company that creates mobile applications and Websites.

“You really don’t learn real software development—[at least] the types of development that we do—in school,” say McCroskey, an ex-developer who started the company seven months ago. “In school you get the basics of how to be a programmer, the fundamentals, and then you go out and you teach yourself several of these [programming] languages. The guys that are hungry to learn, hungry to add to their skill sets… [are the ones we want to hire].” Most of the developers his company hires have three to five years of work experience.

Not to suggest that it’s easy to become a programmer. But this high-demand occupation may not be as elusive as it appears. As with most specialties these days, following industry blogs and fiddling with the latest Apple toy and trying your hand at building a product on your own time can go a long way.

[See our list of the Best Technology Jobs of 2011.]

“It’s really just a matter of jumping in and starting to develop something,” says CompTIA’s Thibodeaux. “Once you create your first program, you get the bug … It’s definitely a learning-by-doing kind of thing because it’s changing so quickly all the time that you have to be in the business of doing it to really stay on top of it.”

Which means people who have the smarts and drive to improve their skills may have a shot at contributing to talent-starved companies.

“People who tinker have just always done really well being able to cross into those types of tech jobs,” says Dice’s Hill. “If people are looking to retrain themselves or repackage their background, I think there are opportunities out there.”

agrant@usnews.com

Alison Green

Frustrated with your boss? Or finding your boss frustrated with you? Here are 10 tips to manage your boss and hopefully end up with a far easier, pleasant, and more productive relationship:

1. Make sure you’re aligned about expectations. Talk explicitly with your manager about your goals and priorities for the year and what success would look like for you, as well as what decisions she should be consulted on and what kinds of things you should handle on your own without her input. This might sound obvious, but often explicitly discussing these topics can bring conflicting assumptions to the surface—and solve them.

[See 11 Helpful Sites for Job Seekers.]

3. Make your boss’s job easy. When your manager assigns you work, summarize your understanding of the outcome she’s looking for, the deadline, and any constraints. For instance, you might say, “So it sounds like we’re looking for a vendor who can get us faster turnaround times, without going up significantly in price, and we need some options by August 15.” Again, it sounds obvious, but often simply repeating back your understanding of the assignment can stop miscommunications before they start. And from there, stay engaged by checking in with her on an ongoing basis, offering updates, and giving her chances for input.

4. Whenever possible, suggest solutions. Instead of just bringing your boss a problem and saying “What should I do about X?”, you’ll make it easier for both of you if you say, “Here’s the deal with X. I’ve thought about A, B, and C, and I think we should do C because… Does that sound okay to you?”

5. Focus on your sphere of control. Inevitably, things will frustrate you that you can’t change or control. Rather than focusing on things that you can’t do much about (like a busy manager who cancels your regular weekly meeting), think about what you can do (such as saying, “I know you’re really busy, but can I talk to your assistant and get 10 minutes on your calendar?”).

6. Speak up when you’re unhappy. If you’re frustrated about something, raise it, talk about the impact, and discuss how it could go differently in the future. (Of course, be smart about this: Bring it up at a time when your boss isn’t swamped or frazzled, and think about your delivery ahead of time, just as you would want her to do if she were raising a sensitive issue with you.)

[See Why Loving Your Work Matters.]

7. Don’t take it personally. There will be times when you have a different point of view than your manager on something where she’s the ultimate decision-maker. When this happens, you should advocate for what you believe, and if you think your boss is making a mistake, part of your job is to explain why. But if your boss ultimately picks a different route, it’s helpful to have reasonably thick skin; don’t take it personally, and keep your ego out of it.

8. Don’t forget your boss is human. Because your boss is human, there may be times when she is grouchy, frustrated, or frazzled, or when she would appreciate hearing that she handled something well. Plus, realize that in the same way you might have sensitivities about the relationship, she might, too. For instance, if you’re taking on responsibilities that used to be hers, she probably won’t appreciate hearing that they used to be a disaster until you came along. In other words, be thoughtful.

[See Rather Than Avoiding Your Boss, Chat Him Up.]

9. Listen to feedback with an open mind, and don’t get defensive. It’s fine to disagree, but do it in a non-defensive way. For instance: “I see what you’re saying. The way I was looking at it was….”

10. Last, have your act together. Stay on top of things, ensure your boss only has to tell you something once, don’t let things fall through the cracks, and generally be someone she can rely on. Often employee complaints of micromanagement can be traced back to problems in this area, and fixing them can fix the micromanagement. You might be surprised how much easier your boss is to work with when you have your act together!

Alison Green writes the popular Ask a Manager blog where she dispenses advice on career, job search, and management issues. She’s also the author of Managing to Change the World: The Nonprofit Leader’s Guide to Getting Results and former chief of staff of a successful nonprofit organization, where she oversaw day-to-day staff management, hiring, firing, and employee development. She now teaches other managers how to manage for results.

Alison Green

As the job market continues to favor employers, job seekers are increasingly reporting poor treatment—from employers who never show up for scheduled interviews to inappropriate demands for private information on online job applications.

Employers may feel they don’t have to pay much attention to the candidate experience in such a flooded market. But this is short-sighted, because the best candidates have options and will turn elsewhere. It’s also unkind to people who are in a vulnerable and anxiety-producing spot.

It’s time for a job seeker’s bill of rights, to improve the hiring process on both sides!

[See 10 Tips for Negotiating a Raise.]

2. Provide clear job descriptions. Too often, employers post jargon-filled, incomprehensible job descriptions that make no sense to anyone outside their organization. Job candidates shouldn’t have to struggle to figure out what an employer is looking for, or whether they might be suited to providing it.

3. Share the hiring timeline. Whether through an auto-reply after an application is received or direct contact with a hiring representative, employers should have some way of telling candidates when they can expect to hear back and what the next steps will be. Leaving candidates hanging isn’t professional and could eventually come back to haunt you if you end up wanting to hire that person in the future.

4. Just say no to unfriendly online application systems. More and more companies are switching to endlessly long online application forms that are often riddled with technical problems. Having to spend an hour wrestling with an onerous application system simply to submit a resume is a bitter pill to swallow.

5. Rein in the invasions of privacy. Increasingly, companies are asking candidates to submit their social security number, references, and even driver’s license number with their initial application. There’s no reason to require this kind of information from candidates who haven’t even gone through an initial screening round yet.

[See The Best Way to Take Control of Your Job Hunt.]

6. Show regard for candidates’ time. From last-minute cancellations without apology or acknowledgment of the inconvenience, to not paying attention in the interview, some employers act like their time is the only time that matters. Most candidates go to a lot of trouble to prepare for an interview—reading up on the company, taking time off work, and often traveling—and their time should be respected too.

7. Don’t misrepresent the work. Interviewers who make the job sound more glamorous than it really is or downplay less attractive aspects of the job—like long hours or a tyrannical boss—are guaranteeing they’ll end up with a resentful, unmotivated employee. Truth in advertising works to everyone’s advantage, because candidates who won’t thrive in the job or the culture can self-select out before they become disgruntled workers.

8. Interviews aren’t a one-way street. Interviews aren’t just about determining whether the company wants to hire the candidate. They’re also about the candidate figuring out if he or she even wants the job. Employers need to be open with information about the job, the company culture, and the manager, so job seekers can make informed decisions about whether the fit is right on their side too.

[See How to Position Yourself to Change Careers.]

9. Keep commitments. Interviewers are notorious for telling candidates they’ll hear an answer within a few days, only to disappear for weeks. Of course timelines change, but candidates should be notified when this happens. Companies that would never treat a customer this way think nothing of being cavalier about the commitments they make to job candidates.

10. Send rejections. Many companies never bother to notify candidates that they’re no longer under consideration, even after candidates have taken time off work to interview or traveled at their own expense. Candidates are often anxiously waiting to hear an answer—any answer—and end up waiting and waiting, long after a decision has been made. This is about simple respect and courtesy; it just doesn’t take that long to email a form letter.

Alison Green writes the popular Ask a Manager blog where she dispenses advice on career, job search, and management issues. She’s also the author of Managing to Change the World: The Nonprofit Leader’s Guide to Getting Results and former chief of staff of a successful nonprofit organization, where she oversaw day-to-day staff management, hiring, firing, and employee development. She now teaches other managers how to manage for results.

Doug Lockwood

Long-term care—particularly whether it will be needed, and how much it will cost—is enough to make anyone uncomfortable. That said, it’s also a topic that often generates lots of questions and is frequently misunderstood.

We spend a lifetime saving our money to provide ourselves and our loved ones with a sense of financial security in the future. Many of us have a great deal of our retirement assets tied up in qualified funds like 401ks and IRAs. It would be a shame if proper planning is overlooked and financial security is diminished by the cost of care. If income is needed to pay for care, keep in mind that these types of assets are subject to federal and possibly state income taxes.

[See 50 Best Funds for the Everyday Investor.]

[In Pictures: 6 Numbers Every Investor Should Follow.]

As you evaluate long-term care insurance, keep the following variables in mind:

Coverage parameters. Policies differ in the types of services they support. Choose a policy that best meets your particular needs.

Benefits payout. How much does the policy pay per day for care in a particular setting? How does the policy pay out? (For example, is the payout a fixed daily amount, as reimbursement for the cost of care up to a daily maximum?) Does the policy have a maximum lifetime limit?

Eligibility. Does the policy use certain “triggers” to determine benefits eligibility, such as the formal diagnosis of an illness or disability? What is the maximum issue age for the policy?

Women may need more. Women tend to live longer and may need additional coverage.

[See the top-rated Vanguard, Fidelity, and T. Rowe Price funds from U.S. News.]

Finally, keep in mind that most long-term care policies sold today are federally tax-qualified, which means premiums paid and out-of-pocket expenses are deductible. Also, long-term care benefits received are not taxed as income up to certain limits.

Protecting the work of a lifetime sometimes means being willing to address the sensitive topics of mortality, old age, and infirmity. These may be inevitable issues for all of us, but we can at least prepare from a financial perspective, and in the process, leave ourselves and our heirs with a better future.

Doug Lockwood , CFP®, is a partner at Harbor Lights Financial Group, a full service wealth-management team that has been dedicated to assisting clients in the accumulation and preservation of their wealth for over eighteen years. He was recently named one of America’s Top 100 Financial Advisors by Registered Rep Magazine (August 2010) based on assets under management. Doug Lockwood is a registered representative with and securities offered and advisory services through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. For more information, go to www.hlfg.com.

Every potential retirement locale has benefits and drawbacks. There is no such thing as a one-size-fits-all retirement haven, and no retirement choice is perfect. Here are some of the pluses and the minuses of ten of the world’s top overseas retirement havens.

[See 10 Tips for Retirement Overseas.]

2. France

Pros:

• Developed-world living.
• Excellent health care.
• Paris is one of the world’s most beautiful and romantic cities.
• Established and eclectic expat communities throughout the country.
• France can be affordable, especially in the southwest.

Cons:

• One of the most onerous tax regimes in the world.
• A difficult place to try to start a business.
• You’ll need to learn to speak at least some French, especially if you want to settle outside Paris.

3. Malaysia

Pros:

• This is the only country in Asia that makes foreign residency easy.
• A diversity of lifestyles.
• English is commonly spoken.
• International-standard medical care.
• Very affordable.
• A tax haven.
• The Asian lifestyle is very exotic for many North Americans.

Cons:

• You won’t be able to return to North America quickly or often.
• This is a third world country.

4. Ecuador

Pros:

• This is probably the most affordable place to live well in the Americas.
• There is an established expat base in Cuenca.

Cons:

• Less accessible than other options in the Americas.
• Less stable than other countries.

[See The 10 Cities With the Oldest Population.]

5. Thailand

Pros:

• One of the most affordable places in the world to live or retire.
• Very exotic to Americans.
• An established expat base.

Cons:

• It’s not easy to establish full-time legal residency.
• It’s halfway around the world from the U.S.

6. Nicaragua

Pros:

• It’s nearby and accessible.
• There is a new program of benefits for foreign retirees.
• The country is very affordable.
• There is an established expat base in Granada.

Cons:

• Political instability.  
• Poor infrastructure.

7. Uruguay

Pros:

• A stable, peaceful, and relaxed country.
• A tax haven.
• Great infrastructure.
• Easy to establish residency.

Cons:

• Far away from the U.S.

8. Belize

Pros:

• This is a country of independent thinkers where you can make your own way.
• The official language is English.
• A tax and banking haven.
• Land values in some regions including the Cayo are one of the world’s great bargains.

Cons:

• The overall cost-of-living is not super cheap, especially on Ambergris Caye.
• Health care facilities are limited.

[See 10 Ways the Recession Has Changed Retirement.]

9. Medellin, Colombia

Pros:

• Pleasant weather year-round, thanks to the elevation.
• This is a pretty city with a beautiful surrounding area.
• There is a more genteel way of life than you’ll find in most of Latin America.
• Real estate values are a bargain.

Cons:

• Establishing foreign residency and opening a non-resident bank account can be difficult.
• No tax perks for retirees from abroad.
• Restrictions on bringing money into the country.

10. Ireland

Pros:

• Real estate in this country is more affordable than it has been in two decades due to the recent market collapse.
• Everyone speaks English.
• The Irish are among the most friendly, welcoming, and hospitable people in the world.
• A relaxed Irish lifestyle.
• Safe.

Cons:

• Unpredictable weather.
• The cost-of-living, while lower than it has been in many years, is not a bargain.

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

Workers with a small amount of savings don’t always feel comfortable getting professional investment help. Some people say they need to accumulate a significant nest egg before it’s appropriate to meet with a financial adviser.

[See 10 Places to Retire on Social Security Alone.]

Most Americans don’t consult with a financial planner. Only a quarter of employees and just over a third of retirees say they use an adviser who provides them with financial advice, guidance, or products for a fee or commission, according to a Harris Interactive survey of 1,134 employees at small and mid-sized companies and 523 retirees commissioned by Principal Financial Group. These workers generally meet with their advisers to establish goals for financial security (60 percent) and to create a plan to achieve those objectives (52 percent), the survey found.

Wealthier households are the most likely to have a professional money manager. Employees in households with $125,000 to $199,999 in yearly income are significantly more likely to use a financial adviser (44 percent) than households earning $74,999 or less annually (between 16 and 18 percent). And only about a quarter (27 percent) of those earning between $75,000 and $124,999 get professional financial planning advice.

[See 10 Things You Should Know About Your IRA.]

Some retirement savers don’t use a financial adviser because they don’t think they have enough savings or investments to necessitate professional help (27 percent) and don’t want to pay a fee (20 percent). When asked how much they would need in order to feel comfortable meeting with an adviser for financial advice or guidance, 38 percent of the respondents say they are not sure. The most popular monetary threshold for meeting with a financial planning professional was $100,000 or more (27 percent). Only small numbers of people say they would feel comfortable meeting with a financial adviser if they had between $50,000 and $99,999 (13 percent), $10,000 and $49,999 (12 percent), or less than $10,000 (7 percent). Just 4 percent of employees say no specific amount of saving or investments is necessary to meet with a financial planner.

[See Companies with the Most Older Workers.]

Some investors are also skeptical of the financial planning industry. A few of the survey respondents say they chose to go without a money manager because they don’t trust financial professionals (14 percent) and know enough about investing to manage their own finances (7 percent). Some people are also unwilling to invest the time necessary to find a financial adviser they can relate to.

Twitter: @aiming2retire

The Italian economist Vilfredo Pareto is famous for creating what is now known as the Pareto Principle, or the 80-20 rule. Pareto discovered that 80 percent of the land and wealth in his country was owned by 20 percent of the population. Subsequent research showed similar land and wealth distributions in other countries and proved the concept could be applied to other topics. The Pareto principle is a popular concept in management and economics, and can even be applied to personal finance. Applying the Pareto Principle to our financial planning can help the approximately 80 percent of the population who are beginning to intermediate investors and don’t have the time or desire to devote to managing an investment portfolio full-time to gain the most results with the least amount of effort.

[See 10 Places to Retire on Social Security Alone.]

Get the biggest bang for your investment buck through target-date funds. Target-date funds, or life-cycle funds, are designed to replicate an entire portfolio through one investment. These funds are actually a combination of several funds which are weighted within the fund based on your estimated retirement date. Those who are retiring in 40 years generally have a heavier allocation of stocks than someone who is retiring in 20 years. The allocation of stocks and bonds is automatically adjusted each year, shifting more of the balance away from stocks and toward fixed income securities as you get nearer to your retirement date. The result is a relatively low-cost fund which is diversified, easy to manage, and has an appropriate risk level.

The benefits of target-date funds. Target-date funds are a one-size-fits-all investment, which is great for people who don’t have the knowledge, time, or desire to manage an active portfolio. Target-date funds are essentially an entire investment portfolio in a single investment. Since the allocation automatically adjusts, they don’t require much maintenance or monitoring, making these investments ideal for the beginning investor.

Target-date investments will almost always be diversified. And since they automatically adjust their allocation to reflect your desired retirement date, they should have an appropriate risk level based on your age. Target-date funds are commonly offered as a 401(k) investment option, and you can also find them at most major brokerage houses and online brokerages, making them easy to incorporate into your retirement plan.

[See 10 Things You Should Know About Your IRA.]

The drawbacks of target-date funds. What is a benefit for new investors can be a detriment to a hands-on investor. Some investors may feel limited by the structure of target-date funds, since they are a one-size-fits-all investment. Target-date funds also don’t always mesh very well with other investments, since a target-date fund is designed to act as a self-contained investment portfolio. You can use a target-date fund with other investments, but you will need to pay extra attention to your overall asset allocation to ensure your investments are set at the appropriate risk level for your age and risk tolerance.

Also, watch out for fees. Many target-date funds are created by lumping together several index funds with low expense ratios. Target-date funds that have relatively low expenses can be worth adding to your portfolio. However, some target-date funds use actively managed funds or more expensive mutual funds and come with a higher expense ratio than you should pay. Research the fund’s expense ratios and the types of investments it contains before investing.

[See Companies with the Most Older Workers.]

Consider target-date funds the 80-20 solution to investing. Target-date funds can be a quick and easy way to begin investing. These automated funds can help you make sure your portfolio is diversified in an age-appropriate way with little action required on your part.

Ryan Guina is a U.S. military veteran, writer, and professional in the corporate world. He blogs at Cash Money Life and The Military Wallet.

By age 20, Liz Funk had already published her first book, Supergirls Speak Out. She earned a decent living as a freelance writer in New York City and dreamed of moving to Hollywood and making it in the entertainment industry. “It was at the apex of the housing bubble, when people were feeling really rich. We’d go to happy hour, drink martinis, and get appetizers,” she says. And then it all came crashing down.

[In Pictures: 10 Affordable Spots for Summer Vacation]

Funk, now 22, moved to Los Angeles to pursue her Hollywood dream in the midst of the recession, and discovered that it was almost impossible to land an assistant job at a production company. Given the fact that she had already written a book and written for major publications such as USA Today and The Washington Post, she thought it would be relatively easy. Instead, she ended up working at a salon for $10 an hour and struggled to pay her $1,300 per month rent. Almost all of her earnings went toward rent, and she used credit cards to cover food, gas, insurance, and even toiletries.

“It was a disaster,” Funk says. “It’s really hard to find a job where you’re paid what you’re worth. Assistants are making $20,000 a year, and you really can’t live on that unless you’re eating Ramen for two meals a day and living with four roommates.”

After five months, Funk felt demoralized and had racked up about $12,000 in credit card debt. She was forced to accept that her Hollywood dream wasn’t going to happen. So she moved back home with her parents in upstate New York to regroup and launch her comeback. Here’s how she did it:

1. Funk paid off her debt and changed her spending habits. Her credit cards were charging up to 22 percent interest, so paying them off was her top priority. She stopped getting her nails done, avoided buying salon hair products that cost over $50 each, and looked for cheaper ways to entertain herself than going to the movies. She started meeting her friends for pizza and beer at a dive bar, which replaced her more upscale martini and salad dinners. “Now that’s the last way I’d want to spend $40,” she says.

2. She took a job that she didn’t love to get back on top of her finances. Funk found a job as a personal assistant, which she wanted to quit by day three, but stayed because she knew she needed the money. She was eventually able to leave that job to handle publicity for a start-up and work part-time as an online community manager.

3. Funk continued building her writing and speaking career. She was so exhausted from hustling in Los Angeles that she didn’t have time to pitch herself to colleges to make her usual round of speaking engagements. She ramped up those efforts once she returned home, and now has fall events on the calendar. She also launched a new website, Coming of Age in a Crap Economy, and will soon release a related E-book; part one debuts next week. The website and book are about the challenges young people face when trying to find their way in such a tough economy.

“I met kids scraping by who couldn’t afford to have their car registered … That financial instability makes them so emotionally fragile, because you feel like you can’t take care of yourself,” she says. The book, she says, helps young people get over the embarrassment they feel from living at home, carrying debt, and being unable to find a full-time job. “I heard it over and over again, that [young people] feel they personally did something wrong, even though they know it’s the economy. But they feel it’s a reflection of their effort,” she says.

[In Pictures: 10 Smart Ways to Improve Your Budget.]

Funk urges her readers to find ways to create new opportunities for themselves. “If you want to be a fashion designer but no one’s hiring in the industry, then you can come together with other young people with design and marketing backgrounds and make an Etsy store. The way to make a bad economy work for you is to create your own career,” she explains.

As for her own experience, Funk says, “It’s been equal parts awful, character-building, and rewarding, because now I’m finally realizing that some of those things I used to buy that I thought were essentials aren’t intrinsic to my happiness. So I guess that’s the silver lining,” says Funk. She has paid off two-thirds of her debt, and still has about $4,000 left.

Most importantly, she regained her emotional stability. “I feel like I paid $12,000 to live in an overpriced apartment with a crazy landlady who bullied me, and then I got yelled at at my stupid job. Those bad things were made even worse by the fact that I was paying for it all with interest,” she says. But considering the prospects of her new project and all the lessons learned, she says she doesn’t regret the experience.

Kimberly Palmer (@alphaconsumer) is the author of the book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.

Starting a new job after graduation usually means a new boss, new tasks, and a new salary. It also means new financial challenges, as young workers figure out how to navigate the world of retirement savings, a post-work social life, and professional demands. A recent survey by TD Ameritrade found that many twentysomethings struggle to save; one in three respondents failed to save for retirement and almost half had stopped saving altogether.

[In Pictures: 10 Affordable Spots for Summer Vacation]

Here is a nine-step guide to taking control of your money before you even receive that first paycheck:

Negotiate, even in this economy. New grads are often so happy to get a job offer these days that they overlook the fact that they still have some power before saying “yes.” Even if the salary is set in stone, asking for a better deal on benefits, flexible work hours, or vacation can result in a more appealing employment package. In the worst-case scenario, the request will be denied, but many employers expect some back-and-forth during the negotiation process.

Make nice with the human resources department. The people who work in the HR department are a new employee’s best friends. They can help with signing up for benefits, filling out the correct tax forms, and getting the rest of the paperwork in order to maximize benefits. They can also assist with any trouble with vacation days or tax form mix-ups. Getting a head start on those benefits is important, because it can pay off big-time later. According to TD Ameritrade’s calculations, savings of $100 a month between ages 21 and 41 will grow to $471,358 by age 67, assuming a return of 8 percent per year. (Waiting to save until age 41 will result in a relatively paltry $59,295.)

Keep paperwork organized. Being a new employee means getting all kinds of forms thrown your way, from health insurance applications to 401(k) details. Much of it might seem boring now, but anyone who ends up needing to switch insurance providers or revamping retirement investments, will want to have access to that paperwork. Investing in a file system or three-ring binder to keep it all handy can help. Some employers make it even easier by offering online documents.

Ignore the new paycheck. Getting a bigger salary compared with the pre-diploma days is thrilling, but one of the biggest mistakes new employees make is spending all that cash in celebration. While a few indulgences are hard to avoid, such as a new wardrobe and the occasional nice meal, continuing to live like a student makes it much easier to build up a solid savings account. Then, with a few months’ expenses tucked away in an emergency fund, a few more upgrades are in order. Improving their new lifestyle slowly, instead of overnight, can help new grads find their financial footing.

[See 7 Biggest Money Mistakes College Grads Make.]

Do an outstanding job. Even for new employees who don’t plan on staying very long, or who know they’re headed to graduate school in a year, doing a good job gives them power. It increases the chances that they’ll leave on their own terms, with glowing reviews that enhance their chances of getting into grad school or landing the next job they really want. Meanwhile, doing a bad job can hurt a reputation, even outside immediate supervisors.

Ask for feedback. Many employers offer formal annual review systems, but there’s no need to wait that long before hearing what the boss thinks. After completing a project, new employees can ask for suggestions or critiques. Even though such feedback can be hard to hear, it increases the chances of doing a better job next time. And stellar feedback can be filed away for future endorsements.

Volunteer for extracurricular activities. Participating in company softball games or volunteer groups gives new employees a chance to meet other people in different parts of the company, and it also offers a chance to flex muscles in different areas. A volunteer gig could turn someone onto the fact that she really loves working with senior citizens, or that his true passion lies in fundraising. Or provide an introduction to a senior executive in a different part of the company.

By the end of the month, the Federal Reserve will complete its second round of quantitative easing—often referred to as QE2—in which it’s buying $600 billion worth of treasury bonds to push interest rates lower and kick-start the economy. The bond-buying program has come under fire from critics who say it has inflated the value of the stock market as well as commodities prices across the board—including the price of gas, which is still nearly a dollar higher than it was a year ago. At the same time, the economy has hit what economists call a “soft patch” following a number of weaker-than-expected economic reports, including a double-dip in home prices.

[In Pictures: 10 Key Retirement Ages to Plan For.]

Europe’s sovereign debt crisis. After its credit rating was slashed again in June, Greece now has the world’s worst credit rating. Default seems inevitable. “Greek debt has taken center stage,” says Bill Larkin, fixed-income portfolio manager at Cabot Money Management. “Everyone is starting to plan for some form of default.”

Rising treasury yields. One of the stated goal of QE2 was to keep interest rates lower, which generally encourages more lending and borrowing. As the end of QE2 nears, treasury rates are expected to begin to move to more normalized levels. Generally, treasury yields move upward as the economy recovers, but Greece’s debt woes are causing investors to seek safety in treasuries, which keeps yields low. Until the situation is resolved in Europe, treasury yields could continue to be held down by sovereign-debt fears abroad. “Right now, treasury rates are being influenced more heavily by what’s happening in Europe,” says Stacey Schreft, director of investment strategy for The Mutual Fund Store, an investment firm.

[See 7 Excuses for Not Saving for Retirement.]

Stocks could wobble. Without a buyer as big as the Fed in the bond market, some experts are concerned that stocks could head south. Since Fed Chairman Ben Bernanke hinted at plans for QE2 in Jackson Hole, Wyo., in August 2010, the SP 500 has risen by more than 20 percent. But the stock market has been in a bit of a tailspin in recent weeks. After posting six consecutive weeks of declines for the first time since 2002, the Dow Jones Industrial Average finished in the black again—barely—last week. Stocks performed poorly after the Fed ended its first round of easing in mid-2010, and Charles Biderman, CEO of TrimTabs Investment Research, says that could happen again. In a recent note to clients, he said: “Without the Fed constantly spiking the market’s punch bowl, the path of least resistance for stock prices is down.”

Hints of a QE3. After the end of June, the Fed will no longer buy treasuries, but it will reinvest proceeds from its earlier purchases. Experts expect the Fed to continue buying those proceeds until the economy looks healthier. The Fed hasn’t hinted at a third round of easing, and Sonders says it would only institute one as a measure of last resort. “From a confidence perspective, the last thing we need right now is to be having a discussion about QE3,” Sonders says.

[See Why Working Longer Won't Close Retirement Shortfalls.]

The Fed funds rate. The Fed funds rate has been at virtually zero for more than two years now, and since March 2009, the Fed has repeatedly said it plans on leaving rates low for an “extended period” of time. As the economy continues to improve, Sonders expects the Fed to ease off that language and begin to hint at a tightening of monetary policy. But in light of the economy’s most recent slowdown, Sonders doesn’t see a rate hike coming until at least the middle of next year. Instead of a third round of quantitative easing, Bill Gross, manager of the world’s largest bond fund, PIMCO Total Return (symbol PTTAX), has said the Fed will continue to use the “extended period” language as a way of keeping rates low. “The language will be the new QE3,” he says.

The 401(k) plan you have is most likely geared to serve the interests of the brokers or insurance companies who advise the plan. The primary beneficiaries are the mutual fund families whose funds populate the plan. Your concern with saving enough so that you can retire with dignity comes last—if at all.

[See 10 Places to Retire on Social Security Alone.]

By the time clients come to me, they are already persuaded by the overwhelming data demonstrating that investing in actively managed funds (where the fund manager attempts to beat a designated benchmark, like the SP 500 index) makes no sense. All the available data indicates that anywhere from 50 percent to 90 percent of these funds fail to equal their benchmark in any year. Over a 10-year period, less than 5 percent of them succeed in doing so. By investing solely in a globally diversified portfolio of low management fee stock and bond index funds, you can significantly increase your returns over the returns achieved by the average investor in actively managed funds, and you can do so at a lower cost. As John Bogle, the founder and former chairman of Vanguard Group, famously stated: “In investing, you get what you don’t pay for.”

Unfortunately, implementing this simple investment strategy is impossible with most 401(k) plans. The most common question I am asked is, “Can you help me configure my investments in my 401(k) plan so they are more like my index-based investments outside of the plan?” This is not an easy task. The actively managed funds which dominate these plans have management fees, typically called expense ratios, ranging from 1 percent to 1.75 percent. Index funds have management fees as low as 0.08 percent and average 0.20 percent.

[See 10 Things You Should Know About Your IRA.]

The reason few 401(k) plans have an extensive selection of index funds is no mystery. Index funds do not pay revenue sharing payments to plan advisers. Actively managed funds do. Advisers to 401(k) plans are sometimes paid to include expensive, actively managed funds in your plan, which are statistically likely to underperform less expensive index funds, passively managed funds, and exchange-traded funds.

According to an article by Ron Lieber in the New York Times, a difference in investment costs of 0.75 percent can cost a new employee $100,000 over the course of her lifetime of employment. Here’s how you can put that money back in your plan assets.

Educate your human resources department or plan administrator about the benefits of a 401(k) that has only pre-allocated portfolios of low-cost index stock and bond funds, passively managed funds, or exchange-traded funds. There are many books and articles on this subject, including my book, The Smartest 401(k) Book You’ll Ever Read. A world-class 401(k) plan is lower cost and yields higher returns than plans with actively managed funds.

Mention to the person in charge of your plan that adopting an index-based plan has another significant benefit. There has been an explosion of lawsuits against large corporations alleging breach of the fiduciary duty owed by plan administrators to participants in these plans. The focus of these lawsuits is the alleged negligence of these administrators in controlling plan expenses. Tell your plan administrator he can litigation-proof your plan against similar allegations by having a plan consisting of low-cost index funds, instead of high-cost actively managed funds.

[See Companies with the Most Older Workers.]

When the data for an appropriate, legally compliant 401(k) plan is conveyed, you should find a receptive audience willing to make a change that will significantly increase returns to employees, without increasing costs to the employer. It’s a win-win solution to a very vexing problem.

Dan Solin is a senior vice president of Index Funds Advisors. He is the author of the New York Times best sellers The Smartest Investment Book You’ll Ever Read, The Smartest 401(k) Book You’ll Ever Read, and The Smartest Retirement Book You’ll Ever Read. His new book, The Smartest Portfolio You’ll Ever Own, will be released in September, 2011.

Automatic enrollment of new employees in 401(k) plans is causing young investors to take on more risk within their 401(k) plans than previous generations did at the same age. Many young employees are invested in target-date funds by default, which tend to have high concentrations of equities for workers far from retirement and gradually shift the investment mix to become more conservative over time.

[See 10 Places to Retire on Social Security Alone.]

Investors under age 30 have significantly increased their exposure to equities within their 401(k) plans over the past several years, according to a recent Vanguard report. The average equity allocation for 20-year-old 401(k) participants has increased 44 percentage points from 41 percent in 2003 to 85 percent in 2010. In contrast, there has been a decline in equity allocations among older 401(k) participants over the same time period.

“Recent developments in plan and investment menu design—particularly the growing use of automatic enrollment and the increasing prevalence of target-date funds in defined contribution plans—have played a critical role,” according to the Vanguard report. “These changes have led younger investors to behave differently than prior generations, who were more likely to invest conservatively and remain at these cautious allocations due to inertia.”

[See 10 Things You Should Know About Your IRA.]

The growing use of target-date funds as a 401(k) investment option, and the default investment for those who don’t make another choice, has significantly contributed to the uptick in more risky investments. Target-date funds allocate your retirement savings into a range of investments including equities, bonds, and cash and gradually shift the investment mix to become more conservative over time. 401(k) participants age 35 and under who own target-date funds held an average of 8.5 percentage points more in equities than employees without a target-date fund, Vanguard found. Among those ages 36 to 54, target-date fund owners held 7.9 percentage points more in equities. Target-date fund owners older than age 54 have only marginally lower stock allocations (-1.6 percentage points) than older investors without them.

Many target-date funds allocate large portions of the fund to equities for young retirement savers. A recent Government Accountability Office review of eight target-date funds found that most fund managers allocate at least 80 percent of assets to equities 40 years before retirement. The way the funds shift to more conservative investments varies widely among different funds. When the funds reached their target retirement date, the equity allocation ranged from 33 percent to 65 percent. Some target-date funds reach their most conservative asset allocation at the designated retirement date in the fund’s name, while others continue to grow more conservative for ten or more years into retirement.

[See Companies with the Most Older Workers.]

Automatic enrollment in 401(k) plans impacts young people the most dramatically because typically only newly hired employees, who tend to be younger, are routinely signed up for the 401(k) unless they opt out. These young retirement savers are often enrolled in target-date funds by default if they fail to make another investment choice. “As more and more plans enter the automation age, equity risk-taking by participants will be increasingly the result of plan design and menu choices, and less a function of participant reaction to current market conditions,” according to the Vanguard report.

Twitter: @aiming2retire

Both traditional and Roth IRAs are excellent places to keep your retirement investments. But you must make a choice about whether you want to pay income tax on your retirement savings upfront while you are working or defer income tax until retirement. Here is how to decide which type of retirement account you should use.

[See 10 Places to Retire on Social Security Alone.]

Traditional IRA. The traditional IRA was created in 1974 by the Employee Retirement Income Security Act (ERISA). This retirement account, often called the deductible IRA, is a favorite of taxpayers seeking more tax deductions now. You can deduct the amount that you contribute to your traditional IRA on your annual tax return.

Traditional IRAs have annual contribution limits and not everyone can contribute tax-deductible funds to these accounts. Income level and whether or not you have a 401(k) or other retirement account at work affects who can get this retirement savings tax break.

Additionally, once you put your money into a traditional IRA, it should remain there until you retire. Otherwise you will face taxes and early withdrawal penalties. And when you do retire you’ll still need to pay taxes on the money when you take distributions. You are required to start taking annual withdrawals after age 70½.

[See 10 Things You Should Know About Your IRA.]

Roth IRA. The Roth IRA didn’t come along until decades later with the passing of the Taxpayer Relief Act of 1997. You can thank Senator William Roth, for whom the Roth IRA is named.

The Roth IRA is for people who don’t mind making their retirement contributions with after-tax dollars so that they can pay fewer taxes when they retire. Like the traditional IRA, the Roth IRA rules state that there are limits on the amount you can contribute each year and income limits on your eligibility to participate. But you won’t find the employer plan limits, so you can generally use a Roth IRA in conjunction with your employer’s retirement plan.

Once you reach retirement age, you can start withdrawing your funds tax-free. Since you make after-tax contributions to Roth accounts, you have a lot more flexibility with regard to taking distributions. Withdrawals are not required in retirement. If you take a distribution before age 59½ you will have to pay income tax and a 10 percent early withdrawal penalty only on the portion of the withdrawal that comes from earnings.

[See Companies with the Most Older Workers.]

Traditional IRAs give you a tax deduction that lowers your current tax bill, but taxes must eventually be paid on the money in retirement. Roth IRAs offer no upfront tax break, but you free yourself from the obligation to pay taxes on the money and the earnings in the future. You can contribute up to $5,000, or $6,000 if you are age 50 or over, to either or both types of retirement accounts in 2011. The annual limit is spread across all of your IRAs, no matter which tax treatment you choose.

Philip Taylor is the author of 104 Ways to Save Extra Money. Read his popular blog, PT Money: Personal Finance for more insightful money tips, like his recent suggestions for the best online checking accounts.

Many people dream about how they will spend the eight or more extra hours per day they will have once they no longer need to go to work. However, Americans between ages 65 and 74 only spend about 1.7 hours more per day on leisure activities than the population as a whole, according to the most recent American Time Use Survey, released by the Bureau of Labor Statistics this week. Instead, most older Americans spend their extra free time lingering slightly longer over everyday activities like meals and household chores and watch considerably more TV than the population as a whole. Here is how Americans spend their time in retirement.

[See 10 Places to Retire on Social Security Alone.]

Sleeping. Retirees generally get more sleep each night than Americans overall, but not as much as you might think. Seniors generally devote 9.67 hours per day to sleep and personal care activities, about 12 minutes more than all individuals age 15 and over.

Watching TV. Watching television is the second most popular activity after sleeping. Retirees spend 3.8 hours per weekday in front of the TV, which is an hour and 15 minutes more screen time each day than the population as a whole.

Leisure activities. Seniors spend significantly more time reading and relaxing or thinking than their younger counterparts, although they spend less than an hour per day on each activity. They also allocate a few minutes more each day to socializing and exercising than individuals overall.

[See 10 Things You Should Know About Your IRA.]

Meals. Retirees linger over meals longer than younger Americans. Seniors between ages 65 and 74 eat and drink for 1.42 hours per day, compared to the 1.25 hours all Americans spend preparing and consuming meals each day.

Household chores. Seniors spend over half an hour longer on household chores per day than the typical American. They allocate 2.41 hours to cleaning and repairs on a typical day, compared to the 1.79 hours most citizens spend managing their household.

Shopping. Older Americans have more time to haggle and comparison shop than their younger counterparts. Seniors spend nearly an hour each day purchasing goods and services.

Working. Many people continue to work past age 65. The typical person between ages 65 and 74 now works for over an hour each day.

[See Companies with the Most Older Workers.]

Helping others. Retirees devote just over half an hour to organizational, civic, and religious activities each day, slightly longer than the 21 minutes the typical American allocates to these activities. While seniors spend significantly less time per day providing care to children or other household members than younger people, they allocate an above average amount of time to helping people who live outside their household.

How Americans Age 65 to 74 Spend Their Day in Hours

(Results for the total population age 15 and older are in parenthesis.)

• Personal care activities (including sleep) 9.67 (9.47)
• Watching TV 3.77 (2.52)
• Household activities 2.41 (1.79)
• Eating and drinking 1.42 (1.25)
• Working 1.15 (3.50)
• Purchasing goods and services 0.94 (0.75)
• Reading 0.62 (0.29)
• Socializing 0.59 (0.55)
• Relaxing and thinking 0.55 (0.28)
• Organizational, civic, and religious activities 0.52 (0.35)
• Leisure computer use 0.38 (0.39)
• Exercise 0.31 (0.29)
• Caring for non-household members 0.31 (0.21)
• Telephone calls, mail, and e-mail 0.23 (0.18)
• Caring for household members 0.11 (0.51)
• Education activities 0 (0.47)

Source: Bureau of Labor Statistics, 2010.

Twitter: @aiming2retire

In Pictures: 10 Steps to Fine-Tune Your Retirement Plan

Developing a solid retirement plan is hard work, so congratulations if you’ve put together the elements of a plan. Surveys show that most Americans do not have a well-conceived idea of their retirement years: when they will retire, how they will afford it, how they will achieve life goals, and the like.

Instead, we all too often fall into accidental retirements. It may be a health problem that takes us there, dramatically affecting our activities, including pulling in a paycheck. Or we may lose a job and find ourselves effectively forced into retirement. Even if we’re not exposed to these problems, they may befall a spouse, parent, or other loved one, making our own retirement the best solution to a bad situation.

[In Pictures: 10 Steps to Fine-Tune Your Retirement Plan.]

Here are the major elements of a tune-up for your retirement plan. You should review these items regularly as your situation changes, but it’s a good idea to formally update your plan at least annually, and more often as your retirement date nears. The two primary elements of your retirement that need attention are your money and your home.

[See 7 Ways to Stay Ahead of Inflation in Retirement.]

Social Security. The decision about when to claim Social Security benefits may be the single most important call you make about your retirement. You can elect to begin taking benefits when you turn 62, or wait up to eight more years. Each year you wait, benefits increase by about 8 percent a year. When you reach your full retirement age (66 or 67), you also enjoy more favorable tax treatment on earned income. (And if the notion of a “full retirement age” is alien to you, visit the Social Security website to learn more.) If you’re married, you should also decide whether it makes sense for one of you to begin receiving spousal benefits. It’s possible to receive these benefits and then claim your own higher benefit at a later age.

Spending and budgets. Developing your retirement spending plan should begin several years before you actually retire. Look at the major areas in which you spend money: mortgage or rent, auto expenses, food, utilities, communications (TV, Internet, and phones), insurance, and entertainment. If you are still paying off a mortgage or one or more cars, try to eliminate these debts before you retire. Review your insurance coverages and decide if you can save money by changing policy terms or even insurers. Shopping around for current insurance rates should be an annual exercise to avoid getting locked into higher-cost policies. That’s also true for communications expenses, which have grown to become big-budget items.

Health insurance. Out-of-pocket healthcare costs are the big wild card of retirement. Even with Medicare and a solid supplemental policy, expenses can mount. Medicare does not cover long-term care. Does long-term care insurance make sense? Most people answer this question by ignoring it or convincing themselves they will be the 1 in 3 older Americans who will not need extended professional care in their later lives. Many people try to preserve the equity in their home as an emergency fund for later-life health surprises. Does this make sense for you?

[See 5 Reasons You Need a Long-Term Care Plan.]

HOME

Is it time to downsize? Moving to a smaller home is an important consideration in retirement planning. Financially and physically, taking care of a larger home can be taxing. Many people become trapped by their possessions as they get older, not wanting to part with memories and family items. Be realistic. Will your children want your keepsakes?

Where do you want to live? Most older people want to stay right where they are. This preference has even been given a name: aging in place. Does that describe you? What about moving to a different part of the country? Retirement can be a great motivator for some lifestyle changes. There also can be big issues relating to the climate, living costs, and family considerations as well. U.S. News‘ Best Places to Retire has tools to help make the move that’s right for you.

[See 6 Ways to Plan for Your Later Years.]

Are your home and neighborhood senior friendly? The two easiest ways to answer this question are to imagine yourself in a wheelchair or unable to drive a car. How would you navigate your home—bathroom, kitchen, bedroom, laundry, and stairs? Could you even enter your home by yourself? Could you walk or use your wheelchair to shop and run other errands near your home? The time to add senior-friendly features to your home is before you need them. Great neighborhoods may look a lot different without a car.

Twitter: @PhilMoeller

Many of us are looking for places to invest or at least preserve extra money for retirement. Conventional retirement accounts such as IRAs and 401(k)s aren’t your only retirement savings options. Here are four savings vehicles that offer something unique to the retirement saver.

[See 10 Places to Retire on Social Security Alone.]

1. High-interest rewards checking accounts. In today’s economy, would you accept a 3 percent interest rate on deposited funds that are 100 percent liquid and FDIC insured? These accounts exist and are easy to find if you are willing to do a little work online. Two good places to start are checkingfinder.com and depositaccounts.com. There are some limitations to these accounts, including maximum balances and a minimum number of debit card transactions each month.

2. Health savings accounts. If you are healthy, your HSA can be one of the best retirement investments around. A fully-funded HSA is even more tax favored than a Roth IRA because the dollars going in and going out are not taxed. Try not to spend your HSA funds until you retire, and then use the funds and accumulated investment earnings to pay for current medical expenses including Medicare premiums and to reimburse yourself for past expenses. It’s all tax-free.

[See 10 Things You Should Know About Your IRA.]

3. I-Bonds. I-Series government savings bonds pay interest based on a combination of fixed and inflation-indexed components. Currently, the fixed interest-rate component is 0 percent, but the inflation-indexed interest rate is 4.6 percent. The other excellent feature of I-Bonds for retirement investors is that the interest earned is tax-deferred until you redeem the bonds. I-Bonds can be easily purchased online from the government’s Treasury Direct site. There are annual purchase limits of $10,000 per Social Security number, including $5,000 in electronic bonds plus $5,000 in paper bonds.

[See Companies with the Most Older Workers.]

4. Single premium deferred annuities. A single premium deferred annuity (SPDA) is a special type of annuity that is purchased with a single lump-sum payment by the owner. However, the annuity benefits are not paid immediately, as with the more widely known single premium immediate annuity. Instead, the annuity value grows on a tax-deferred basis until the contribution and growth amount is annuitized. There are fixed and variable SPDAs, but in either case, the earnings and distributions are only taxed when you receive them. Also, there are no legal limits on how much you can invest in a SPDA. As with any annuity, be very careful about fees and the fine print. Consider building a ladder of smaller annuities that commence in different years in order to spread the risk around with different companies and to perhaps earn a better overall return as market conditions change.

Mark Patterson is an engineer, patent attorney, baby boomer, and author of The Failsafe Retirement System. He blogs on matters of personal finance and retirement planning at Tough Money Love and Go To Retirement.

While some consumers are experts when it comes staying within the streamlined family budget through comparison shopping, haggling, negotiating, coupon-clipping and making necessary cuts, some of us are—ahem—a bit lazy. Here’s where we’re coming up short and what you can do about it:

[In Pictures: 10 Affordable Spots for Summer Vacation]

Failing to set financial goals

Many consumers are leading a “spend as you go lifestyle,” which is not productive. The bottom line is that we are much more inclined to save when we’re saving for something specific, whether a home, or college tuition, for example. Write down your short and long-term goals (where do you want to be in five years or ten?) and have a plan to meet those goals.

Being disorganized

I’m talking largely about paying bills late. What you may not know is that when you pay your bills late, you’re not only faced with late fees (which could easily exceed your minimum payment on your credit card), but higher interest rates and credit score consequences, which affects your ability to buy a home, a car, or even get a job. Get it together: have a designated place for bills, and set aside a time to pay them, or arrange to have them paid automatically.

Ignoring your credit score

Your credit report has a huge impact on what you can do, financially. Ideally, you should check it – from each of the three credit reporting agencies—once a year. Go to annualcreditreport.com; it’s free. Why should you bother if you’re not taking out a loan anytime soon? It’s important to identify potential problems, such as unauthorized charges/fraudulent behavior, and inaccuracies. After all, error rates range from about 3 percent to 25 percent (and some studies put that figure as high as 80 percent). (See 50 Ways to Improve Your Finances in 2011.)

Loan options

It’s amazing that we’re spending twice as much time researching a car purchase as we are a home loan, particularly since a home is the single biggest investment people make. Try the new Zillow Mortgage Marketplace iPhone App. It makes it easy since you can shop for quotes—anonymously—and even contact the lender right from your phone—while out touring homes.

Letting bad habits slide

The numbers don’t lie: two-thirds of Americans are either overweight or obese, according to the National Center for Health Statistics. The costs over a lifetime? Nearly $260,000. As for smoking—another killer —a pack a day habit costs about $4,000 a year. Smoking also significantly increases your insurance costs, from life insurance (expect to pay about three times as much as a non-smoker) to homeowners (non-smokers typically get a 10 percent discount on their premiums), auto (non-smokers generally get a 5 percent discount), down to your health insurance. Run the numbers on ehealthinsurance.com and you’ll see: smokers pay several hundred dollars more per year than non-smokers.

[In Pictures: 10 Smart Ways to Improve Your Budget.]

Relying on the government—or an employer—for financial security

This is a big no-no, particularly with promised benefits like Social Security and Medicare headed for bankruptcy. The reality is that we’re going to have to work much longer, and retire on much less—or both. In an environment like this, you’ve got to take the initiative and be captain of your own financial ship.

Waiting for a miracle

A lot of Americans are waiting for something miraculous that will bail them out of their predicament. Why do you think so many of us play the lottery? Many of us think this our best chance for improving our financial situation. What’s particularly disturbing is that those earning an annual $13,000 or less spend a whopping 9 percent of their income on lottery tickets. Any idea what the odds are of striking it rich? As slim as one in 195 million.

Vera Gibbons is a financial journalist based in New York City and is a contributor to Zillow Blog. Connect with her at veragibbons.com.

Kimberly Palmer, senior editor for U.S. News World Report, is the author of Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back. Send her your personal finance questions.

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