Kip Tips

Don't Be Frightened by Your Finances

There's good news for people looking to boost their retirement savings and for retirees whose savings have taken a hit.

By Cameron Huddleston, Contributing Editor, Kiplinger.com

October 31, 2011

Happy Halloween. Or perhaps I should say Not-So-Happy Halloween because Bankrate.com reported some frightening findings today from its Financial Security Index.

For starters, the percentage of Americans who say they are better off now than a year ago hit a new low -- only 17%. And the percentage of people who are more comfortable with their savings today than a year ago also hit a new low -- 11%. And one-third of those surveyed reported lower net worth.

SEE ALSO: 13 Financial Frights

Older Americans have been hit particularly hard, according to the Bankrate.com Financial Security Index. More than half of those between ages 50 and 64 say they're LESS comfortable with their savings today, and 38% say their financial situation is worse now than a year ago.

There is some good news, though, especially for older Americans. Social Security recipients will see a 3.6% increase in their benefits next year as the result of the first cost-of-living adjustment since 2009 (learn more). And some Medicare beneficiaries will see their premiums drop next year (get the details).

Retirement savers can stash more in their 401(k)s, 403(b)s or Thrift Savings Plans next year because contribution limits will rise. And the income eligibility limits to deduct IRA contributions will increase. See 2012 Retirement Account Contribution Limits for more details. Contribution limits on retirement accounts for the self-employed also will increase next year (see Best Retirement Plans for the Self-Employed).

And lower-income taxpayers can get a credit -- and reduce their tax bill -- for contributing to a retirement plan (see A Tax Credit for Retirement Savers).

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