Former participants in the AT&T Pension Benefit Plan have sued AT&T and the plan claiming their benefits were reduced because of the way benefits are calculated for those who retire before age 65.

According to the complaint, the plaintiffs and proposed class members are forced to forfeit accrued, vested pension benefits if they retire before age 65 and/or receive their pension benefit in the form of a Joint and Survivor Annuity. They say this is because the plans terms reduce these alternative forms of benefits using Early Retirement Factors and Joint and Survivor Annuity Factors, which result in plan participants receiving less than the actuarial equivalent of their vested accrued benefit, as required by the Employee Retirement Income Security Act (ERISA).

The plaintiffs explain that a participants pension benefit is expressed as a monthly pension payment beginning at normal retirement age, which is age 65 under the AT&T plan. This monthly payment is a single life annuity because it pays a monthly benefit to the participant for the participants entire life. Under ERISA, if an employees accrued benefit is to be determined as an amount other than an annual benefit commencing at normal retirement age [of 65] . . . the employees accrued benefit . . . shall be the actuarial equivalent of such benefit . . . .

Thus, the complaint says, ERISA requires that if a plan allows a participant to retire early with a reduced monthly pension, the value of his reduced monthly pension must be actuarially equivalent to the participants monthly pension benefit commencing at age 65. The case concerns two ways in which the AT&T plan improperly reduces pension benefits, in violation of ERISAs actuarial equivalence rules.

First, the plaintiffs allege the plans Early Retirement Factors reduce benefits to less than the actuarial equivalent amount of the participants monthly benefits commencing at age 65. The earlier the participant retires, the greater the reduction to his benefits. For example, under most programs of the plan, if a participants normal pension benefit beginning at age 65 is $10,000 per month, and he retires at age 60, his monthly benefit is reduced by a factor of 0.58. As a result, the value of his monthly benefit is 58% of $10,000, or $5,800 per month, when the actuarial equivalent benefit he is entitled to receive under ERISA is approximately $7,090 per month.

Second, the plaintiffs point to applicable Treasury regulations that say, A qualified joint and survivor annuity must be at least the actuarial equivalent of the [single life annuity]. Equivalence may be determined, on the basis of consistently applied reasonable actuarial factors. A joint and survivor annuity is expressed as a percentage of the benefit paid during the retirees life. For example, a 50% joint and survivor annuity provides a surviving spouse with 50% of the amount that was paid during the retirees life.

The plaintiffs allege that the plans Joint and Survivor Annuity Factors reduce benefits to less than the actuarial equivalent amount of a participants benefit expressed as a single life annuity. For example, if a participants single life annuity benefit is $10,000 per month, and he is married, his default form of benefit is a 50% joint and survivor annuity, which is reduced by a factor of 0.90 for most programs under the plan. As a result, the participants monthly benefit is 90% of $10,000 per month, or $9,000 per month, when the actuarial equivalent benefit he is entitled to receive under ERISA is approximately $9,200 per month.

The plaintiffs say the to the best of their knowledge based on the available information, the Early Retirement Factors and the Joint and Survivor Annuity Factors in the AT&T plan applicable to the class have not been updated in over a decade, despite dramatic increases in longevity. Because the Early Retirement and the Joint and Survivor Annuity Factors have not been updated to be in line with reasonable actuarial assumptions, they do not yield actuarially equivalent payments to Class members as required by ERISA. As a result, Defendants have improperly reduced Class members pension benefits in violation of ERISAs actuarial equivalence requirements, the complaint says.

In addition, the plaintiffs say, ERISA Section 203(a) provides that an employees right to his or her vested retirement benefits is non-forfeitable and states that paying a participant less than the actuarial equivalent value of his accrued benefit results in an illegal forfeiture of his benefits. Thus, the Plans terms that reduce participant benefits to less than their actuarial equivalent value violate ERISAs anti-forfeiture requirement set forth in [Section] 203(a).

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AT&T Sued Over Calculation of Early Retirement Benefits - PLANSPONSOR

A blue-chip dividend portfolio pays about 2% today. Put a million bucks into a bucket of these stocks and youll bank just $20,000 in yearly dividends. Thats barely extra changeon a million invested!

Theres a better way. I prefer to focus on stocks and funds that simply arent as familiar as the big names to most investors. They do offer growth potential. But most importantly, they dont sacrifice yield for perceived safety. In fact, they yield roughly 3x to 4x the blue-chip stocks, providing a lot more retirement-income cushion in years where the market stalls.

Most people love the idea of this Perfect Income Portfolio, yet millions of retirees across the country find themselves piled into the same group of overowned, overpriced blue chips because the traditional wisdom says thats what retirement is supposed to look like.

We can avoid that trap and indeed live on dividends for the rest of our lives.

Sure, retiring well isnt as easy as just finding any stock with a high yield and blindly buying with both hands. For example, first-level income investors thought they couldnt lose with Guess? (GES) a couple years ago. Its sinking share prices drove its yield to as high as 9%what a bargain!

But, had they looked past the first level, they wouldve seen the rapidly declining cash and terrible payout coverage figuresthen bolted for greener pastures and avoided a 25% payout cut.

The key is sustainability, and a dividend payment (blue line above) thats higher than the cash flows that fund it (orange line above) is not built to last.

Thats exactly what Contrarian Income Report subscribers got with Cohen & Steers Infrastructure Fund (UTF), which I recommended in February 2016. This closed-end fundwhich focuses on energy, water, transportation and other infrastructure-related companieswas distributing a whopping 8.8% at the time. That hefty yield propelled 70% in total returns in just three years!

Today, lets explore some high-dividend picks doling out fat yields ranging from 7.5% to 12.2%. Well highlight a couple of near-perfect retirement dividends, and two more flawed payouts to avoid.

Altria (MO)

Dividend Yield: 8.2%

Tobacco stocks have traditionally been high yielders, but Altrias (MO) sudden ascendency to 8% territory truly grabs my attention.

Too bad this isnt a screaming dividend growth story.

Altria has long had to deal with mounting pressures in the U.S.: greater health-consciousness, governmental anti-smoking campaigns, escalating taxation of its products. But now it has a new anchor strapped to its ankle.

Back in March, when I highlighted MO as a clearly cheap high-dividend stock, I pointed out Altrias efforts to stem the tide by taking a $12.8 billion, 35% stake in e-cigarette company Juul. I also pointed out that Altria still could be in long-term jeopardy regardless because Juul is increasingly finding itself in a similar regulatory pickle.

Juul isnt immune from the same pressures. The company faces class-action lawsuits in Philadelphia and New York federal courts over the companys marketing tactics and over its disclosure of nicotine levels. Juul also temporarily halted sales of most of its flavored nicotine pods in November in hopes of getting out in front of aggressive federal regulators worried about spiking e-cigarette use.

It has gotten worse since then.

Reports of vaping-related illnesses have sprung up across the country. The Centers for Disease Control says 12 deaths and 805 cases of lung injury have been linked to vaping. The CDC has warned against e-cigarette use while it investigates. Several states have either banned or are working on bans of flavored vaping products. The upheaval essentially forced Altria to scuttle merger discussions with Philip Morris International (PM).

Altria has lost a quarter of its value since my warning, and its possible this gets much worse before it gets better.

New Mountain Finance (NMFC)

Dividend Yield: 10.0%

Business development companies (BDCs) were created by Congress to provide capital to small- and midsize companies. Its a noble cause, but a difficult trade to ply. In fact, its one of the few industries I advise against investing in via funds, because all the duds tend to drown out the handful of stars in the space.

New Mountain Finance (NMFC) is one of the few BDCs that inspire a little confidence.

The quick hits on its business: It invests between $10 million to $50 million by issuing debt all across the capital structure and most of that is floating-rate. Its target businesses generate annual EBITDA of $10 million to $200 million. Portfolio companies tend to have barriers to competitive entry, recurring revenues and strong free cash flow.

These businesses provide strong profits to help fund NFMCs payouts. And its not every day you can get a double-digit dividend at a discount, but here we are. NMFC has a net asset value of $13.41, and at last check, it traded at $13.30 per share.

So while recession worries are going to rattle BDCs of all stripes, New Mountains high credit quality makes it a safer bet than most.

Armour Residential (ARR)

Dividend Yield: 12.2%

I quipped in a June 12 column that ARMOUR Residential REIT (ARR) is taking a rare multi-year break from cutting its dividend.

Not so fast, my dividend friend.

On June 24, the company tucked this into a press release: The Company also announced today the expected July 2019 cash dividend rate for the Companys Common Stock of $0.17 per common share with an anticipated record date of July 15, 2019, and anticipated payment date of July 29, 2019.

Thats how you tell investors you just cut the dividend without actually telling them you cut the dividend.

Ill keep this quick. Through a long series of dividend cuts, this mortgage real estate investment trust (mREIT) has reduced its monthly payout by 82% since 2011. Ive mentioned before that stock prices typically chase dividends higher. Well, the same goes for the other direction.

Armour even boasted in its most recent quarterly report that Core Income exceeded dividends paid for the twelfth straight quarter, referring to its non-GAAP measure of profitability.

Thats not much to crow about when youre OK with adjusting the dividend lower. Also, heres what Core Income has been up to over the past few years.

Contrarian Outlook

Lets move on.

New America High Income Fund (HYB)

Dividend Yield: 7.5%

New America High Income Fund (HYB), a closed-end fund (CEF) focused on junk debt, isnt immune from the occasional downtick in its distributions, either. But its a far more common (expected, even) issue in debt funds, which serve at the whims of the debt market.

Whats important is that HYB maintains a fairly high yield level, and that active management has proven its worth over time by walloping the indexes.

New America High Income is a primarily U.S.-focused junk bond fund. But it does offer a little international diversification, investing a little less than 20% of its portfolio in countries such as Canada, Luxembourg and Brazil.

Credit quality is middlingabout 40% of its bonds are in the higher tiers of non-investment-grade debt. But here, youre trusting managements judgment to not only spy values in this kind of debt, but to properly use leverage to make the most of its bets.

Its not a smooth ride, for sure. HYBs ebbs and flows are far more exaggerated than index funds such as the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), thanks in part to that leverage.

But its hard to argue with the results. Theyre certainly better than its junk bond ETF counterparts!

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, click here for his latest report How To Live Off $500,000 Forever: 9 Diversified Plays For 7%+ Income.

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How To Build The Perfect Retirement Income Portfolio - Forbes

Some people will do anything to escape the rat race.

Just ask Daniel, 36, a Manhattan corporate lawyer earning $270,000 a year, who told Suzy Weiss of the New York Post that he lives in New Jersey to avoid city taxes, lives on rice and beans, owns one patched-together suit per weekday for work, and layers up during the winter instead of turning the heat on all so he can save 70% of his salary and retire early.

It's working: He's saved more than $400,000 and is set to retire in three years, Weiss wrote.

Other six-figure earners Weiss talked to have similar goals and are pulling out all the stops to reach them, from banning buying drinks out to wearing shoes that are falling apart.

They all hope to join the "Financial Independence, Retire Early" movement that was popularized when "Your Money or Your Life" was published 20 years ago. It's nothing new but more millennials are becoming interested in the community, according to Weiss.

Read more: What 8 people wish they knew before retiring in their 20s and 30s

Being content with less and refusing to succumb to lifestyle inflation are the tickets to staying on track to retire early.

J.P. Livingston, who runs a personal-finance blog called The Money Habit, built a nest egg of more than $2 million before retiring at 28. Livingston worked in Manhattan's finance industry and earned $100,000 in her first post-grad job, she previously told Business Insider.

But determined to retire early, she tucked away 70% of her take-home pay. In an effort to be more frugal, she bought furniture from Craigslist and chose a living situation more modest than one she could have afforded with a roommate in a three-floor walk-up on the Upper East Side for $1,050 a month (reasonable rent in a New Yorker's eyes).

Even those not working in traditional high-salaried careers make do with a frugal lifestyle. Consider Joe and Ali Olson, who quit their jobs as public-school teachers in their early 30s with $1 million in the bank. They saved 75% of their income and lived in a 400-square-foot home, keeping their annual expenses to about $20,000, Business Insider previously reported.

Read more: A day in the life of a 34-year-old early retiree who lives in NYC, grew his net worth to $1.25 million in just 5 years, and wakes up at 7:30 a.m.

Regardless of early-retirement goals, frugality is the key to building wealth.

Look no further than Warren Buffett, who still lives in the modest home in Omaha, Nebraska, that he bought for $276,700 (in today's dollars), or Richard Branson, who is famously frugal when it comes to buying luxury items.

Frugal lifestyles help millionaires get rich in the first place, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute and an author of "The Next Millionaire Next Door: Enduring Strategies for Building Wealth," in which she surveyed more than 600 millionaires in America.

She studied the characteristics most predictive of net worth and found that six behaviors, which she called "wealth factors," were related to net-worth potential, regardless of age or income. One of those is frugality: a commitment to saving, spending less, and sticking to a budget.

"Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income," she wrote.

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A 36-year-old New York lawyer who makes $270000 says he lives off rice and beans so he can save 70% of his salary. He's part of a growing movement of...

Alabama is suffering a serious teacher shortage.

Nearly every district---its easy to say every district---has been impacted by this shortage, Alabama Deputy Superintendent Jeff Langham told state school board members Thursday in Montgomery.

A statewide task force composed of 18 education officialsmostly superintendentshas been working since January to make recommendations on how to deal with the shortage.

Langham presented the board with 33 recommendations23 for recruiting teachers and 10 for retaining them. The group's suggestions deal with everything from raising teacher pay to extending temporary teaching certificates to revamping retirement benefits.

Everything seemed important, so it was hard to prioritize, Langham told board members during the work session. Getting new teachers in the pipeline isnt the only problem. Keeping them in teaching is difficult, too. According to the task force, 8% of teachers leave the profession every year.

Roanoke Superintendent Chuck Marcum chaired the task force and told AL.com the set of recommendations is a tool kit and a variety of steps are needed. I dont think theres a silver bullet, Marcum said.

State board member Dr. Cynthia McCarty, R-Jacksonville, said the problem has grown.

When she joined the board in 2014, she said, (the shortage) was primarily upper-level math teachers, physics and chemistry teachers and special education.

Now, its not just those teachers, McCarty said. Its even elementary school teachers.

We see these critical shortages just kind of expanding every year, Langham said, and Alabama isnt the only place shortages are a problem. Its really of epidemic proportions nationwide.

Traditional paths to becoming a teacherthrough a college-level teacher preparation programarent providing enough teachers to replace those leaving, Marcum said.

A lot of teachers are going to have to come from alternative routes, Marcum said, like those who want to become teachers after working in a different field. The task force recommended easing the path somewhat for those on alternative pathways.

Marcum said the task force isnt trying to make it easier to be a teacher but removing barriers for those who want to teach is important with a dwindling pool of candidates.

You dont just want a warm body, he said. But you still have to have someone at the head of the class.

Recommendations also include improving the public image of teachers. Sometimes were our own worst enemy, Marcum said, because we dont do a good job promoting the good things teachers do."

The committee also suggested recruiting students while theyre in high school through dual enrollment, allowing them to earn college credit toward becoming a teacher.

The full report with all recommendations can be seen at the end of this article.

Marcum said his district in Roanoke is feeling the shortage, too. Were at the tipping point because of the age of our faculty, he said. Of the 100 certified people working in the districts schools, he said, 19 have enough years under their belt to retire. If they all retire, hed be hard-pressed to replace them, he said.

Another problem, Langham said, is the number of teachers teaching a subject they dont have a major or minor in themselves, known as teaching out of field.

According to state data, during the 2017-18 school year, nearly 2,800 teachers were teaching out of field. Thats nearly 6% of the states 46,565 teachers. Male teachers are more than twice as likely to be teaching out of field as female teachers. Statewide, 9.5% of male teachers are teaching out of field, while 4.4% of female teachers are.

However, in 36 schools across the state, more than one out of every three teachers is teaching out of field.

More evidence of the shortage, Langham said, is that nearly every Alabama school district has hired teachers who are working under provisional or emergency certificates, meaning they arent certified but are working toward full certification.

Such provisional or emergency certificates can be used to help find teachers for hard-to-fill subjects, like chemistry or foreign languages, or remote geographic areas.

In the 2017-18 school year, 441 teachers were teaching through an emergency certificate, and 665 were using provisional certificates. Thats 2.4% of all teachers in Alabama.

The 70 schools where 10% or more of the teachers were using emergency or provisional certificates during the 2017-18 school year were all middle and high schools, according to state data.

Marcum said one of the task forces recommendations was to extend the length of time a teacher could work under an emergency certificate. Lawmakers did that last spring while the task forces work was underway, allowing an emergency certificate to be held for up to four years.

Low salaries and a cut in retirement benefits during the recession a decade ago added to the problem, Langham said. The creation of a new set of retirement benefits, called Tier 3, was rejected by the Senate as too costly, but Marcum said theyll be back at the table during the next legislative session.

Lawmakers raised the starting salary for Alabama teachers above $40,000 for the first time this year. The task force didnt recommend any specific amount by which to raise teacher salaries.

If the board votes in November to accept the recommendations, a new group, the Teacher Quantity and Quality Roundtable, will consider how to put the recommendations into action, Marcum said.

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More pay, better retirement part of pitch to solve Alabama teacher shortage - AL.com

About a dozen seniors at the Carlisle Naples have been taking harmonica lessons with Glenn Basham, concertmaster for the Naples Philharmonic, which helps with breath control and expanding breathing capacity, especially for those with COPD. Alex Driehaus, Naples Daily News

Heads up millennials and other future retirees.

Naples has been named as the "best place to retire" again.

After recently ranking No. 1 on a list of 'best cities for early retirement' in the United States, Naples has once again clinched the title of the best place to retire in Florida and the country.

The newest ranking comes from SmartAsset,a New York financialtechnology firm.The study is based on three factors: tax-friendliness, medical care and social life.

More: Naples named No. 1 on list of 'best cities for early retirement' in United States

Naples earned the top ranking for 2018 when SmartAsset did the same type of study.

"We have ranked the best places to retire in Florida for five years," said Alyssa Annunziato, a spokeswoman for SmartAsset, in an email."Naples has been ranked in the top 10 every year, as well as being ranked No. 1 nationally for the past three years."

Lana Butsky, center left, and Connie Leon, center right, enjoy the sunrise during an Easter Sunday service hosted by the First United Methodist Church at the Naples Pier on April 21, 2019. (Photo: Jon Austria/Naples Daily News USA TODAY NETWORK - FLORIDA)

To determine the rankings, SmartAsset looksat state and local tax ratesand calculatesthe number of doctors' offices, recreation centers and retirement centers for every 1,000 residents, as well asdeterminesthe amount of seniors already living in each area included in its study.

Naples ranked high in all areas of the study, earninga score of 100 on SmartAsset's retirement index.

New Port Richey took second place for the best place to retire in Florida, with a score of 64.13.

These are the other cities rankings in the top fivefor the state, along with their scores:

As for the national rankings, the other four cities making the top fiveare: Cumming, Georgia (93.67), Beverly Hills, California(78.51), Gig Harbor, Washington (70.64) and Wasilla, Alaska (70.17).

FortMyersranked 37 out of 208 cities statewide and stood at No. 141 nationally.

Also,FortMyersBeach ranked 26th in the state and 90th nationally.

Meanwhile, another personal finance site, Magnify Money, recently listed Naplesamong the top 20 for a FIRE retirement an acronym for "financially independent, retire early."

Community members gather at the Naples Pier for an Easter sunrise service hosted by the First United Methodist Church on Sunday, April 21, 2019.(Photo: Jon Austria/Naples Daily News USA TODAY NETWORK - FLORIDA)

According to theMagnify Money article, "The FIRE approach to retirement has become popular among many younger, millennial savers in recent years. In a nutshell, practitioners of FIRE aim to retire as early as they can, but only once they have achieved a level of financial independence that would free them from conventional employment. The core strategy for building a nest egg that would allow one to retire early is to adopt extremely frugal saving and spending habits."

Not surprisingly, half of the top 20 cities that made Magnify Money'slist are in Florida, well-known for its retirement and snowbird-friendly reputation. Fort Myers ranked No. 9.

To determine the rankings, the firmcompiled data on 171 cities across America and scored them on cost of living and quality of life. The values were combined to produce an overall ranking of the best cities for a FIRE retirement.

More: What were the top 5 things we tasted in September at Naples restaurants?

For those wondering,New York City ranked dead last in Magnify Money's report because of its high cost of living.

Asked if the top rankings bySmartAsset and Magnify money have helped the local real estate market, Phil Wood, president and CEO of John R. Wood Realtors in Naples, answered "absolutely," followed by a exclamation point, in an email.

"We use that type of thing in our website blog," he said. "And any other place that is appropriate.The fact that Naples does so well in several different rankings each year is definitely helpful in our sales efforts."

Jennifer Sangalang, a social media strategist for USA TODAY Network-Florida, contributed to this story.

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Naples does it again, ranks as No. 1 spot to retire in the country - Naples Daily News

Spending and saving are inversely related.

To that end, the best way to save more is to simply spend less, says Rob Berger, a deputy editor at Forbes, in his new book, "Retire Before Mom and Dad."

Berger, who founded the personal-finance site DoughRoller.net, retired at age 49 from his career as a lawyer. He had socked away an amount equal to 25 years' worth of his annual expenses the magic number for reaching financial independence, he writes.

Berger says our spending and saving rates act like levers adjusting them will increase or decrease the time it takes to reach financial freedom. Importantly, income has less to do with it than you might think. Ultimately it depends on the share of income you spend and, by extension, the share of income you save, not necessarily the dollar amounts.

To help readers visualize the numbers, Berger created a spreadsheet that calculates how many years you need to save depending on your spending rate and the return rate on your investments.

Let's say you're starting with zero savings. If you make $100,000 a year, after taxes, and spend $80,000, that leaves $20,000 left over to save.

Put another way, you have a spending rate of 80% and a saving rate of 20%.

If you plan to continue spending $80,000 annually in early retirement, you'll need $2 million in the bank before you leave work ($80,000 x 25). That'll take nearly 30 years if your spending and savings rates remain constant and your investments earn a 7% return.

But if you spend just 50% of your $100,000 income and plan to keep it that way in retirement and thereby save 50%, then you'll need only $1.25 million banked before you retire ($50,000 x 25), which would take about half the time.

Here are a few more examples, courtesy of Berger's spreadsheet calculator (note that these figures assume that you begin with $0 in savings, earn 5% to 9% annually on your investments, and plan to withdraw 4% of your nest egg each year in retirement):

As you can see, for every additional 15 percentage points of your income that you save, the number of years until early retirement is reduced by about five. The exactitude of this will depend on the return on your investments each year.

These calculations also don't take into account any increases in income. Say your take-home pay increases by 10% one year and you keep your level of spending the same by directing that extra 10% into savings, you can reduce the time it takes to reach financial independence by a few years.

Also consider that your annual spending may go down after paying off debt, for instance, so your target number may decrease along the way as well.

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Exactly how much income to save if you want to retire early - Business Insider

Setting money aside for retirement is no easy feat, especially when near-term bills monopolize your limited income. Such is the plight for a large number of younger workers -- millennials whose earnings have yet to peak and who are grappling with various forms of debt, from student loans to credit card balances.

But surprisingly, younger workers don't cite debt as the primary reason they're behind on retirement savings. According to TD Ameritrade's 2019 Retirement Pulse Survey, 66% of millennials say they need to catch up on building their nest eggs. But the No. 1 reason they're behind is none other than high housing expenses.

If your housing costs are preventing you from building long-term savings, you should know that that's a dangerous path on which to continue. And the sooner you change course, the greater your chances of giving your nest egg a much-needed boost and salvaging your senior years.

IMAGE SOURCE: GETTY IMAGES.

Whether you rent your home or own it, your housing costs shouldn't exceed 30% of your take-home pay. And if you fall into the latter category, that 30% threshold should include your mortgage payments, property taxes, and homeowners insurance. If you're currently spending well above that level, it could easily explain why you're struggling to build retirement savings.

But here's the problem: If you don't build retirement savings, you're apt to suffer when your senior years roll around. That's because most companies today don't offer pensions, which means that without personal savings, your only means of paying the bills in retirement will be Social Security. And while those benefits are certainly helpful, they'll only replace about 40% of the average earner's former income. Most seniors, meanwhile, need a good 70% to 80% of their previous earnings to maintain a decent lifestyle, which means that counting on Social Security alone is a dangerous thing.

Furthermore, if your goal is to travel a lot in retirement or live in a city you've always dreamed of spending time in, then you may need more than 70% to 80% of your former income to make that a reality. And that's why you can't afford to continue putting off your retirement savings. If you do, you'll likely end up falling short in the future.

What's the solution? If you're a renter, it's fairly simple: Move to a cheaper apartment once your lease is up. Switch neighborhoods if that's what it takes, or find a roommate to bunk with to lower your housing costs and free up cash for your nest egg. If you're already a homeowner, things do get a little bit trickier, but as long as you're not underwater on your mortgage, you can sell your home and downsize to a smaller one or buy a similarly sized property in a more affordable neighborhood with lower taxes.

Is moving a major sacrifice? Yes. But if your housing costs are keeping you from building savings, it's a worthwhile one to make.

Imagine that by slashing your housing expenses, you manage to free up $500 a month to sock away for retirement. If you do so over 35 years and invest that money at an average annual 7% return (which is more than doable with a stock-centric portfolio), you'll wind up with $829,000. Free up $600 a month, and you'll be looking at $995,000, all other things being equal.

The younger you are when you start saving for retirement, the more opportunity you'll give your money to grow. If housing expenses are getting in the way of your nest egg, do something about them -- before you lose out on even more valuable time.

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This Is the No. 1 Reason Millennials Struggle With Retirement Savings - The Motley Fool

Wondering about the best way to save for retirement in your 40s? Mid-life is a crucial point in any savers timeline. While you dont necessarily have time on your side like you did in your 20s, you still have enough time to put together a plan to retire comfortably.

We all know we should save throughout our working lifetimes. But many of us just dont get around to it.

It can be easy to build some level of comfort and security into later life if youll just start saving early, money expert Clark Howard says. But most people dont start thinking about saving until they hit 40. If thats you, its never too late to start saving.

With a little planning, you still have time to squirrel away a sizeable nest egg and were going to show you how!

For most people, you cant even begin to start thinking about saving until you free up some money in your life. Thats where a budget comes in.

Budget doesnt have to be a scary word. Sometimes people are put off by the idea of budgeting because they dont know how to get started.

While there are a lot of approaches to budgeting, there are two in particular we return to again and again here on Clark.com:

The CLARK method is our own budgeting plan developed in-house by members of Team Clark. Its easy to follow because we want people to be able to stick to it. And youre one click away from the free worksheet that will help you get started!

Meanwhile, the envelope method is a time-tested traditional approach to budgeting that you may already be aware of. But well make it easy for you to get started with this approach, too!

Chances are youre already participating in the retirement savings plan at work and you may not even know it!

Thats because most employers will automatically default you into some level of contribution. The only way to get out of it is to specifically take steps to opt out of the plan. Which you would never do, right?

Furthermore, some employers even offer a company match when you contribute to your 401(k) or Roth 401(k). Weve got a full explanation of the similarities and difference of both investment choices here.

If your employer is generous like this, you want to be sure youre contributing at least the minimum to pick up the full match. Otherwise, youre leaving free money on the table!

Note: If you have children, you may wonder whether saving for their college education should take a higher priority than saving for your own retirement.

Scholarships, grants, in-state tuition, community college and working during school can help your son or daughter deal with the cost of education. But you dont have any of those options for your later life. The only one who can make retirement happen for you is you!

Thats led Clark to make a pretty bold pronouncement over the years:

Do not save a penny for your childs college education until you fully fund your own retirement, he says. There are no scholarship plans for your golden years!

Finally, when you want to save for retirement in your 40s, you should also invest outside of the workplace. That often involves a tax-free account called a Roth IRA thats available to most people.

Weve got a complete explanation of how the Roth IRA works here.

We all know that life happens and things can get in the way of your savings plans. Maybe thats been the story of your life up until now.

Thats why its so important to have an emergency savings account. With an emergency fund, you wont have to halt your efforts to save for retirement in your 40s each time you see the dark clouds of a rainy day approaching.

Clark recommends you have between three to six months of living expenses stored in your emergency fund to deal with bumps and bruises of life.

Its not what somebody makes, its what it costs them to live each month, he says. I dont want somebody to be overwhelmed by [the three to six month number]. I want them to gradually build up the money for living expenses.

The key thing with your emergency savings is you want to keep the money liquid for when you need it on a moments notice. And you also want to earn a high rate of interest on the money to achieve compound growth.

Fortunately, there are so many places you can stash cash today. For example, there are a variety of online banks and fintech startups that pay a high rate of interest.

In fact, its not uncommon right now to earn at least 2% APY on your savings with these players versus the 0.09% or whatever paltry number you see with the traditional banks. You just have to look in the right places, which our guide to the best online banks will help you do.

Are you still paying high interest rates on a credit card? Now is a great time to get a lower interest card and do a balance transfer. Generally, youll need a FICO credit score of around 720 to get the best balance transfer offers. Be sure to read our article 6 Steps to Pay Off Debt With a Credit Card Balance Transfer before doing this.

Reducing your debt today is one surefire way to get on the path to retirement tomorrow. If youre carrying a lot of debt right now, you have at least one thing to be thankful for: With interest rates so low compared to what they have been in the past, what youre paying each month to service that debt is very favorable. Take advantage of this unique moment in American history and keep reducing your debt.

Particularly if youre around 45 or older, Clark Howard recommends looking at a 15-year mortgage instead of a 30-year one when youre buying or refinancing a home.

I know it might mean you have to buy a little bit smaller home to be able to afford the monthly payment on a 15-year loan if youre in your mid-40s or later, Clark says, but the benefit to your wallet and your financial security will be extraordinary.

You can read more of Clarks thoughts on this topic in our article Should I Take Out a 15-Year Mortgage Instead of a 30-Year Loan?

Just know this: The short-term sacrifice of a higher monthly payment on a 15-year loan will put you in good shape down the road. Thats because the latest research shows most happy retirees go into retirement either mortgage-free or with a five-year time horizon of wiping out their mortgage debt.

It doesnt matter whether youve been saving all along or youre just getting started saving for retirement in your 40s. Either way, you can still have a nice retirement if you just have a plan and stay focused on it.

Not sure how to get started saving for your retirement? Weve got a simple guide to How to Start Investing and Saving for Retirement that youll want to see.

We know saving for retirement can seem overwhelming at times. Thats why if youve got more questions we didnt cover, you might think about calling our Consumer Action Center.

We have a FREE help line open Monday-Thursday from 10 a.m. 7 p.m and Friday from 10 a.m. 4 p.m. EST with volunteers available to answer YOUR concerns! Call Team Clark @ 404-892-8227.

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5 Best Ways to Save for Retirement in Your 40s - Clark.com - Clark Howard

Retirees will spend a significant amount of money on health care. Still, many older Americans don't plan properly for it.

A healthy male-female couple retiring at age 65 in 2019 can now expect to shell out $285,000 on health-care expenses in retirement, according to Fidelity Investments' annual analysis.

Fidelity's analysis, which assumes the couple are eligible for Medicare, includes premiums, copays and other cost-sharing expenses, along with prescription-drug costs.

Two-thirds of retirees said dealing with health issues was among their top worries about retirement, according to a new study by Wells Fargo. Most people assume Medicare will cover their costs, but that is not the case.

Expenses that are not covered by Medicare dental coverage, basic vision and over-the-counter medicines would be on top of that $285,000 estimate.

The estimate also excludes long-term care costs.

According to Fidelity, about 15% of the average retiree's annual costs will be used for health-care-related expenses, including Medicare premiums and out-of-pocket expenses.

Of course, Medicare is the primary insurer for the 65-and-older crowd. Provided that you've paid your dues in the workforce for at least 10 years, you'll qualify for Part A at no cost, which covers hospital stays, skilled nursing facilities and hospice care.

You can opt in to Part B, which covers doctor visits and outpatient care, but requires a monthly premium.

You may also choose to enroll in Medicare Part C, or Medicare Advantage. These are plans from private insurers that can add more coverage such as vision, dental or prescription benefits.

Alternatively, if you have Medicare Parts A and B, you can apply for a supplemental insurance policy, called Medigap, to help cover health costs such as copayments, coinsurance and deductibles.

If you only want prescription coverage, you can opt for Medicare Part D instead of C.

To weigh what's best, your State Health Insurance Assistance Program, or SHIP, has free counseling to help find the right plan.

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There are also steps you can take to mitigate expenses where Medicare falls short.

For starters, review your plan. There are lots of Medicare plans available, with different levels of coverage. For example, with Medicare Parts A and B, you can see any doctor who accepts Medicare, but with a Medicare Advantage plan, it will be less expensive if you see doctors and go to hospitals that are in the plan's network.

Medicare open enrollment for 2020 runs from Oct. 15 to Dec. 7. During this time, you can change from original Medicare to a private Medicare Advantage plan or switch back to original Medicare.

Compare prices for plans in your area through Medicare.gov or on your state insurance department site.

Fund a health savings account. Get ahead of health-care costs by investing tax-free dollars in an HSA before you enroll in Medicare.

Not only is the money contributed tax-deductible, but both the earnings and withdrawals as long as they're for health-care expenses are also not taxed.

Once medicare coverage begins, you can no longer contribute to the HSA but you can tap those funds to pay for any medical costs that are not covered, including copays and other out-of-pocket expenses.

Manage your retirement income. Generally speaking, the more you make, the higher your premiums will be for Medicare Parts B and D.

Once you've reached retirement, manage distributions from all your taxable, tax-deferred and Roth accounts in a way that will keep you in the lowest tax bracket as possible. Tap the accounts that allow tax-free withdrawals first such as Roth accounts and brokerage accounts, which are only taxable when you sell appreciated assets to distribute cash.

Distributions from HSA accounts, Roth IRA accounts and cash value life insurance policies don't count in the formula that determines your Medicare Part B premiums.

"Figuring out optimal withdrawal strategies is where a good accountant or financial planner can help clients save a lot of money," said physician and certified financial planner Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida.

Consider long-term care insurance. If you want to make sure you have funds to cover assisted living, nursing home or at-home care, look into buying a long-term care insurance policy.

These policies help cover the cost of care for two to five years or longer. Even though insurance premiums have been jumping by double digits, many financial advisors typically recommend maintaining this coverage for now.

See below for a comparison of how policy features and costs have changed over time.

CHECK OUT: 5 questions to ask yourself before buying a home, even if you can afford a down payment via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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Here's how to keep health-care costs down in retirement - CNBC

Las Cruces has been selected as a top retirement destination by Where to Retire Magazine. The city is profiled in the magazines November/December 2019 issue. Here is a statement from the City:

Annette Fuller, editor of Where to Retire Magazine, said Las Cruces possesses qualities important to todays retirees. A cultural hub in the Chihuahuan Desert, Las Cruces spices things up with its rich heritage and tasty chiles, Fuller said. The revitalized downtown boasts an art deco theater and a year-round farmers market. Thanks to the Organ Mountains and nearby White Sands National Monument, the city has plenty to do outdoors, and New Mexico State University provides sports and culture. The mayor touted the inclusive residents, calling them friendly, accommodating and gracious.

William F. Studer, Jr., Interim City Manager, said the magazines profile of Las Cruces is very much appreciated.

This is another welcomed accolade about Las Cruces quality of life and how it impacts our residents and visitors to the City, Studer said. Las Cruces continues to receive positive national attention as an appealing community for retirees, and our commitment to enhance and improve the quality of life for all of our residents remains strong.

According to the latest U.S. Census Bureau data, more than 700,000 Americans relocate to new towns in retirement each year. Generally, these relocating retirees are healthier, better educated and more affluent than those who choose to not relocate, and they bring significant economic benefits to their new states and hometowns.

As an authority on retirement relocation since 1992, Where to Retire Magazine has covered hundreds of the best retirement regions, towns and master-planned communities. The magazine is published six times a year and has a U.S. circulation of 200,000. The magazine also selected Las Cruces in 2010 as top retirement destination.

A free trial issue of the magazine can be requested atWhereToRetire.com.

Also, Las Cruces has been selected as the host city of the New Mexico Senior Olympic Games for the next three years. Next year, the Games will be in Las Cruces from June 10, 2020 through June 13, 2020. As many as 1,200 athletes are anticipated to participate in the states 2020 Senior Olympic Games.

The New Mexico Senior Olympic Games will return to Las Cruces in June 2021 and June 2022, with specific dates still to be determined for those events.

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Las Cruces Featured in Where to Retire Magazine - KRWG