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Breaking Down The Daunting Task Of Saving For Retirement

(CBS) – One million dollars in savings.

That's how much you could need for a comfortable retirement. But most Americans are way behind. CBS 2's Marissa Bailey reports on what you can do right now to start saving for retirement.

"We've had a big year," says Clare Liston.

She and her husband Tim just turned 30, bought a new home and are expecting their first child.

"I just want to make sure that we're prepared," Clare Liston says.

Meanwhile, Gayle Voss and her husband, Randy, are in their 50s, paying off credit card debt, their daughters' college loans -- plus running a new business.

"A decent amount seems to come in, but boy it goes out so fast," Gayle Voss says.

 "Reality set in that we've got to start looking at it now," her husband says of retirement.

CBS 2 asked financial advisor David McClellan to give both couples a financial check-up.

First, Randy and Gayle Voss. Although they have debt, "the silver lining for them is Randy has some pension benefits and that is guaranteed income for life," McClellan says.

But it's not enough. "The next 5 to 7 years are absolutely critical," cautions McClellan.

His first tip: Immediately pay down high-interest rate credit cards and education loans.

"All that money you used to be paying on interest expense is now money that's available to save," advises McClellan.

Another tip: Maximize savings, a daunting task for someone nearing retirement age.

"If you start saving when you're 55 you need about $5,100 a month to reach $1 million in 10 years," McClellan says.

The calculation from Forum Financial assumes 7 percent annual return and contributions increased by 3 percent each year and shows you need less the earlier you start.

If you start at 45, you need to put away $1,545 a month.

Age 35? $615 a month.

Start at 25 and you'll  only have to save $272 a month.

"I didn't put the importance on it that I do now," Tim Liston says.

Clare and Tim Liston learned they're doing many things right. Both take advantage of their employers' retirement plans. And they've started cutting back on daily expenses.

"It really starts with reining in your spending," McClellan says.

One idea: Skip that $4 latte several times a week. Also, taking public transit instead of taxis can add up to hundreds of extra dollars every month.

The Listons talked about one hurdle with McClellan: how to keep their retirement savings going while helping their child afford college.

"Those two are in competition for the same dollar," he says.

His advice: Consider a college savings plan but not at the expense of their own retirement savings.

The Vosses say they feel better having an answer and a plan.

"I finally got my head out of the sand," Randy Voss says.

Other resources:

Retirement calculators from AARP, the Financial Industry Regulatory Authority and Bankrate.

 

 

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