You may believe that retirement is such a far-off event, so there is no need to worry. While the first part may be true, planning and saving for retirement needs to start now. An average American aged 40-60 has less than $100,000 saved for their retirement income, which is quite far from the $1.7 million that surveys have said would be needed for a comfortable living. If a comfortable retirement is what you want, then there are some steps you can take that will ensure you are on the right track with retirement planning.
How Much Do You Need? The first step to planning for your retirement is to determine how much you will need to save to afford it. The projected rise of living expenses, how many years you will likely be in retirement, and the type of lifestyle you want to lead are some of the things you should take into consideration during this time. Just keep in mind that those are just estimates and your financial needs may fall under or over.
Start Your Saving. As soon as you know how much you will need, it is time to start saving. The sooner the better. Do not be discouraged if you are just starting in your career. Start with a small amount every paycheck and then every month or few months you can begin rising the amount you save. The point is to make saving a priority!
Contribute to Employer’s Retirement Plan. If your employer offers a retirement savings plan, such as the 401(k), join as soon as possible and contribute as much as you can. Doing this may result in your taxes being lower, and your employer contributing more. It is also set up as an automatic deduction, so you never have to worry about forgetting. It keeps you accountable in building your retirement fund.
Leave Savings Alone. After you have stacked up a good amount of savings, it may be easy to want to borrow from that amount. However, borrowing from your retirement fund could result in losing principal and interest, losing tax benefits, and being required to pay withdrawal fees. Instead, you should always keep something separate such as a rainy-day fund, that would be available in case of emergencies. Also, if you were to lose or switch jobs, it is advised to either keep your money invested in that retirement account or move it over into your new employer’s plan.
Learn About Your SSI Benefits. Social security checks are monthly payouts that are based on your pre-retirement income. For most retirees, the SSI check replaces 40% of their income. In 2020, the average amount of an SSI check was about $1,543 per month. There may even be some resources where you can check your expected SSI earnings. You can adjust your saving strategy if you believe that is something you can live off of, otherwise, just keep saving.
Start your planning now, so you can give yourself the gift of a comfortable retirement later.
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We hope this information on retirement planning is helpful.
If you’d like to learn how we can help you plan your retirement, call Empower Brokerage to speak to one of our Life and Annuity experts (888) 539-1633
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