2Summer 2018
25th Anniversary Edition
FDIC Consumer News
Saving Money
1997| Retirement Planning and Saving: Mistakes to Avoid
Excerpted and updated from “Retirement
Planning: Saving for Your Golden Years,”
Spring 1997.
Millions of working Americans find it’s
a challenge just to pay for their house,
car, insurance, child care and other
expenses each month. So how can
people even think about setting aside
money for their retirement 20, 30 or
even 40 years away? We can’t predict
the future, but we can help you learn
from the past. Here’s a list of common
mistakes and miscalculations on the
road to financial security — wrong
turns we want you to avoid.
Saving too little. How much of your
money should go to retirement savings?
The answer depends on factors such as
how many years until you retire, how
much you already have in savings and
pensions, what kinds of expenses you
foresee in retirement, and the impact
of inflation on your future buying
power. When in doubt, perhaps the
simplest approach is to try to put 10 to
20 percent of your income each year
into money toward your retirement.
Regular, automatic savings programs
also help make it “painless” to set
money aside.
Starting too late. The sooner you
begin saving, even with relatively
small amounts contributed year after
year, the faster you can develop a solid
retirement fund. Through the magic of
compound interest, a little bit of money
saved over a long period can grow to be
a lot of money. Unfortunately, too many
people delay saving for retirement until
they meet other goals, such as saving
for a child’s college education.
Not diversifying enough. Putting
all your (nest) eggs in one basket can
be a problem if the approach you take
doesn’t perform well or actually loses
money. Consider a mix of savings
and investments that might perform
reasonably well under any economic or
market conditions.
Not doing your homework. A
wrong move can cost you thousands
of dollars in taxes, fees, penalties or
bad investments. Learn as much as
you can about planning and saving for
retirement. A good place to start is with
free resources from the public library,
your employer’s personnel department
and governmental agencies. Talk to
financial professionals you know and
trust. Ask for a clear explanation of
the pros, cons and costs of what they
recommend, and do some comparison-
shopping before you make a final
decision. And don’t forget to check your
savings and investments regularly.
Falling for retirement rip-offs. If you
get a call, letter or visit from someone
peddling financial products with
features that seem too good to be true,
trust your instincts. There are many
scams designed to trick consumers
into giving up cash, checks, credit card
numbers or other valuables for little
or nothing in return. Common cons
involve promising fantastic returns on
investments that turn out to be fraud. If
you think you’ve been approached by a
con artist or you’ve been victimized by
someone offering a financial product or
service, report it to the Federal Trade
Commission (visit ftc.gov/complaint or
call toll-free 1-877-FTC-HELP). If the
scam is internet-related, send an email to
the federal government’s Internet Crime
Complaint Center at www.ic3.gov. Q
About This Special Edition
The Federal Deposit Insurance
Corporation has been publishing
FDIC Consumer News quarterly
since the fall of 1993 to deliver
timely, reliable and innovative
tips and information about
financial matters, free of charge. In
recognition of the 25th anniversary
of the newsletter, we have issued
this special edition — a collection of
some of our more popular articles
through the years, condensed and
updated, with one article from each
year going back to 1993.
A lot has changed in banking and
financial services for American
consumers, from an increase in the
FDIC deposit insurance limit (going
from $100,000 to $250,000) to
major technological advancements
(transitioning from basic banking
at branches to mobile banking
from anywhere with smartphones
and apps). Something that hasn’t
changed is the FDIC’s commitment
to helping people learn about their
rights, responsibilities and options as
they manage their money in today’s
financial marketplace. We hope you
will find this issue to be truly special
and beneficial.
INSIDE
Saving Money 2
About FDIC Insurance 3
Protecting Yourself 6
Banking and Bill Paying 11
Borrowing Money 12
Getting Organized 15
Ages and Stages 17
Test Your Financial IQ 19
25th Anniversary Edition
FDIC Consumer News
Saving Money
1997| Retirement Planning and Saving: Mistakes to Avoid
Excerpted and updated from “Retirement
Planning: Saving for Your Golden Years,”
Spring 1997.
Millions of working Americans find it’s
a challenge just to pay for their house,
car, insurance, child care and other
expenses each month. So how can
people even think about setting aside
money for their retirement 20, 30 or
even 40 years away? We can’t predict
the future, but we can help you learn
from the past. Here’s a list of common
mistakes and miscalculations on the
road to financial security — wrong
turns we want you to avoid.
Saving too little. How much of your
money should go to retirement savings?
The answer depends on factors such as
how many years until you retire, how
much you already have in savings and
pensions, what kinds of expenses you
foresee in retirement, and the impact
of inflation on your future buying
power. When in doubt, perhaps the
simplest approach is to try to put 10 to
20 percent of your income each year
into money toward your retirement.
Regular, automatic savings programs
also help make it “painless” to set
money aside.
Starting too late. The sooner you
begin saving, even with relatively
small amounts contributed year after
year, the faster you can develop a solid
retirement fund. Through the magic of
compound interest, a little bit of money
saved over a long period can grow to be
a lot of money. Unfortunately, too many
people delay saving for retirement until
they meet other goals, such as saving
for a child’s college education.
Not diversifying enough. Putting
all your (nest) eggs in one basket can
be a problem if the approach you take
doesn’t perform well or actually loses
money. Consider a mix of savings
and investments that might perform
reasonably well under any economic or
market conditions.
Not doing your homework. A
wrong move can cost you thousands
of dollars in taxes, fees, penalties or
bad investments. Learn as much as
you can about planning and saving for
retirement. A good place to start is with
free resources from the public library,
your employer’s personnel department
and governmental agencies. Talk to
financial professionals you know and
trust. Ask for a clear explanation of
the pros, cons and costs of what they
recommend, and do some comparison-
shopping before you make a final
decision. And don’t forget to check your
savings and investments regularly.
Falling for retirement rip-offs. If you
get a call, letter or visit from someone
peddling financial products with
features that seem too good to be true,
trust your instincts. There are many
scams designed to trick consumers
into giving up cash, checks, credit card
numbers or other valuables for little
or nothing in return. Common cons
involve promising fantastic returns on
investments that turn out to be fraud. If
you think you’ve been approached by a
con artist or you’ve been victimized by
someone offering a financial product or
service, report it to the Federal Trade
Commission (visit ftc.gov/complaint or
call toll-free 1-877-FTC-HELP). If the
scam is internet-related, send an email to
the federal government’s Internet Crime
Complaint Center at www.ic3.gov. Q
About This Special Edition
The Federal Deposit Insurance
Corporation has been publishing
FDIC Consumer News quarterly
since the fall of 1993 to deliver
timely, reliable and innovative
tips and information about
financial matters, free of charge. In
recognition of the 25th anniversary
of the newsletter, we have issued
this special edition — a collection of
some of our more popular articles
through the years, condensed and
updated, with one article from each
year going back to 1993.
A lot has changed in banking and
financial services for American
consumers, from an increase in the
FDIC deposit insurance limit (going
from $100,000 to $250,000) to
major technological advancements
(transitioning from basic banking
at branches to mobile banking
from anywhere with smartphones
and apps). Something that hasn’t
changed is the FDIC’s commitment
to helping people learn about their
rights, responsibilities and options as
they manage their money in today’s
financial marketplace. We hope you
will find this issue to be truly special
and beneficial.
INSIDE
Saving Money 2
About FDIC Insurance 3
Protecting Yourself 6
Banking and Bill Paying 11
Borrowing Money 12
Getting Organized 15
Ages and Stages 17
Test Your Financial IQ 19