Money Management

If you’re one of the many households that may struggle financially when you retire, there are steps you can take today. Find out how to get back on track. 

One of my biggest financial regrets is that I didn’t put more money away for my old age when I was in my 20s and 30s. Sure, living in a big city on a tight budget was tough financially. But in hindsight, if I’d socked even small amounts away into a brokerage account, I’d be in a much better position today.

Data from the National Retirement Risk Index shows that I’m not alone. The latest figures from the Center for Retirement Research show that around half of working-age households won’t be able to retire with the same standard of living they have now. More worrying? Its data also shows that many households are not aware that they could be in trouble.

Work out how much you’ll need each month

It isn’t always easy to know how much we might need in our old age, particularly if we try to factor in the cost of unknowns like medical care or assisted living. It’s also hard to predict for sure what assets such as stocks or real estate might be worth because markets fluctuate. Finally, there’s the ever-present cloud of inflation, which means our money doesn’t go as far with every passing year.

All the same, you can set yourself some concrete goals. As Ryan King from Making Money Simple told us, “It’s all about having a plan and then working backward to get there.” Use your current budget to understand what you spend each month. Then think about how that might change when you retire. For example, you won’t need to spend money commuting to work. You might have paid down your mortgage, which would eliminate a significant monthly cost.

“Make sure you’ve built your investing pot to the level where you can live the lifestyle you want before you retire,” says King. “For example, if you know you’ll want $2,500 per month, start making the necessary investments today so when you get to your retirement age your investments will be able to give you $2,500 per month.”

Some financial planners suggest you’ll need about 80% of your current income to live comfortably in your old age. But there’s no set answer for everybody. If you’re planning to travel the world, your budget will be very different from someone who wants nothing more than to do Wordles and crosswords in the garden.

Calculating your retirement nest egg

Some people set themselves a goal of, say, having $1 million in their retirement account when they stop working. That may be enough, but you’ll get a more accurate picture if you use your monthly costs to figure out the size of your ideal retirement fund. You may also need to factor any Social Security payments and other income sources into your calculations.

In terms of getting to an actual figure, the 4% rule is a good starting point. It isn’t perfect, and there are other tools you can use as well. The idea is that if you can easily live off 4% of your nest egg in your first year of retirement, you’ll have enough money to last another 30 years or more.

Let’s work backward from King’s example of $2,500 a month. That would mean you’d need $30,000 in your first year of retirement. Using the 4% rule, you’d need $750,000 in your retirement fund to maintain your current lifestyle. Next, think about when you want to retire and use a retirement calculator to figure out how much you need to contribute each month to reach that figure.

It’s never too late to save for your old age

If you’re worried that you’re behind with your retirement savings, try not to panic. Speaking personally, I can’t change what I did with my money in my 20s and 30s, but I can do things differently moving forward. Take a look at your budget and see if you can squeeze out any extra cash for your retirement contributions. Perhaps you can sacrifice a subscription service or skip a couple of take-out meals to put more into your retirement fund.

Here are some other steps you might take:

Use a tax-advantaged account: There are a couple of different tax-advantaged accounts out there. Find out if your employer offers a 401(k) — and if it will match any contributions you make. If so, look for ways to max out your contributions. If that’s not an option, find out which type of individual retirement account (IRA) would work best for you.Use catch-up contributions: There are limits to how much you can contribute to tax-advantaged accounts. But if you’re over 50, you may be able to put in some extra cash and top up your retirement fund. Put simply, any ways you can reduce your tax bill (either now or in retirement) will mean you have more money in your old age.Prioritize your retirement contributions: It’s all too easy for retirement contributions to get lost in the pressures of day-to-day bill payments. Consider setting up an automatic payment shortly after your paycheck comes in, so it can’t fall off your financial to-do list.Give yourself as much time as possible: The longer your money has to work for you, the bigger your nest egg will be. Compound interest — earning interest on your interest — can really add up.

When we’re young, it’s easy to fall into the carefree mindset of “Eat, drink, and be merry, for tomorrow we die.” Life is short so we should have fun while we’re young. That’s all very well, but it would be nice to eat, drink, and be merry well into our golden years as well. That takes a bit of planning, saving, and may also involve some sacrifices along the way.

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If you’re one of the many Americans who aren’t using their vacation time, it might damage your prospects of promotion. Learn more about why time off is a good thing. 

I worked in Japan for a couple of years and one of the many culture shocks I experienced was people’s attitude toward vacation. “I feel uncomfortable taking days off because nobody else does,” one colleague told me. Another proudly explained that his grandfather had only taken a couple of vacation days in his whole career.

Japan is extreme, but the same thing happens in many countries, including the U.S. A recent survey by Pew Research showed that around 46% of the American workers who receive paid time off don’t use all of it. That’s a lot — particularly as it isn’t good for employees or companies.

How skipping vacations can hit your bank balance and your health

Some people feel that they get more done by not using their time off. The trouble is, the opposite can also be true. Imagine a woodcutter working harder and harder with a saw that’s getting more and more blunt. Working more hours often does not increase productivity. The woodcutter needs to stop and sharpen the saw (or take a vacation). Afterward, he or she will get more done with less effort.

Overworking means you’re more likely to suffer from stress, burnout, and, ultimately, not perform to your full potential. That can impact your bank account directly in terms of medical costs, and indirectly in terms of your career progression. I know it sounds counterintuitive. After all, surely giving your employer more of your time would build job security?

Working hard is important if you want to get a promotion, score a pay raise, and have good relations with your colleagues. However, there’s a line. Overworking can also make you less productive. Harvard Business Review cited an Ernst & Young study that showed people’s year-end performance improved by 8% for every 10 hours of vacation time they took.

We’ve all had brain-fogged days when we’re too tired to think straight. If you don’t take breaks and holidays, you’ll likely have more of them. When you’re exhausted it’s also harder to deal with tricky situations with co-workers. You’re also more likely to make mistakes. As psychologist, Adam Borland, told the Cleveland Clinic, “It’s like a car trying to run with a very limited amount of gas in the tank.”

Productivity aside, there are serious health issues to consider. A study by the World Health Organization showed that people who work more than 55 hours a week are more at risk of heart disease and stroke. Going back to my experiences in Japan: one colleague was hospitalized with severe back problems that came directly from spending too much time at his desk. Depending on your medical insurance, the cost of treating mental and physical health issues can really add up. If one way to avoid those issues is to take and enjoy your paid leave, some might describe it as a win-win.

Why workers don’t use their time off

When you get caught up in the day-to-day meetings and to-do lists, it’s easy to put off the non-urgent but important things like booking vacations or medical check-ups. Indeed, the Pew survey found people had many reasons not to use all their paid time off:

Felt they didn’t need it (52%)Worried they might fall behind (49%)Felt bad about co-workers taking on extra work (43%)Thought it might harm promotion chances (19%)Worried they might lose their job (16%)Discouraged by manager/supervisor (12%)

If you’re using any of the reasons above to put off booking time off, perhaps it’s time to reconsider. That doesn’t mean you have to plan your next vacation the minute you finish this article. (Especially if you don’t have cash in your savings account to do so.) But at least think about how you can build more breaks into your daily routine — perhaps by fitting in regular exercise, or even by going for a short walk on your lunch break.

If you are overdue for a holiday and worry about burdening your co-workers, bear in mind they’d have to pick up even more slack if you call in sick. And you likely cover for some of them when they take vacation time too. Ultimately, it isn’t your responsibility to shield your colleagues from that extra work — the biggest responsibility you have is to yourself and your well-being.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Five popular cold medicines contain an active ingredient that an FDA advisory panel recently determined most likely doesn’t work. Look for these options instead. 

In September, 16 members of an FDA advisory panel came to a unanimous decision that a drug called phenylephrine probably is not effective when administered in oral form. That’s not good news for consumers, who have been spending billions from their bank accounts on medication with this ingredient in it.

When you’re breaking out your credit card to deal with a stuffy nose, here are some meds you should absolutely avoid — as well as some tips on what to use instead.

These five cold medicines may not provide effective relief

Phenylephrine has been FDA-approved since the 1970s and is the active ingredient in many cold medicines, including these five very popular options:

Mucinex Sinus-MaxRobitussin Peak Cold Nighttime Nasal ReliefSudafed PE Sinus CongestionTherafluVicks DayQuil and NyQuil Severe Cold & Flu

In some cases, phenylephrine is the only active ingredient in these meds that is specifically designed to deal with cold and flu symptoms. For example, Sudafed PE Sinus Congestion contains only phenylephrine and ibuprofen for pain relief. In others, such as in the case of Mucinex Sinus-Max, there is also an expectorant in addition to the phenylephrine and a pain reliever. But the expectorant deals with phlegm in the airway, rather than nasal congestion.

Phenylephrine has become the dominant decongestant in the U.S. market since a 2005 law required decongestants containing pseudoephedrine to be moved behind the counter at pharmacies. Pseudoephedrine is a different decongestant that is used in the production of methamphetamines. More than 242 million packages of cold and allergy medication with phenylephrine were sold in 2022 alone, costing consumers an estimated $1.8 billion.

What should you buy instead?

Rather than buying a medication that may not work, you have plenty of other options available to you.

For example, you could potentially purchase nasal spray antihistamines, nasal corticosteroids, and nasal saline products.

Saline sprays flush out nasal passagesCorticosteroids are designed to relieve stuffinessDecongestant nasal sprays cause swollen blood vessels to contract.

Most of these nasal sprays are sold over the counter as well, but there is a bit of a learning curve in figuring out how to use them effectively.

You also have the option to purchase medications with pseudoephedrine instead of those with phenylephrine. You will need to talk to a pharmacist to get these medications. They are sold over the counter, but are restricted and you have to show a valid photo ID to buy them. Pharmacies record purchases of pseudoephedrine products for up to three years and you are limited in the amount you can buy at once.

Pseudoephedrine is not addictive, nor is it any more dangerous when used as instructed than phenylephrine. As long as you are not purchasing it to use in the production of illegal methamphetamine, there is no reason that your purchase of medications containing this active ingredient should cause any problems.

You can even stick with your favorite brands when buying pseudoephedrine — you’d just have to switch the type. For example, while Sudafed PE may not be effective due to the fact phenylephrine is its active ingredient, other products made by the manufacturer do contain pseudoephedrine instead of phenylephrine, including Sudafed Sinus Congestion

If you have concerns, talking to a pharmacist about what ingredients are best for your needs could be a helpful approach — at least until the FDA decides how to respond to the latest advisory panel ruling and any ineffective drugs are reformulated to better help consumers.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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