In these troubled financial times, many of us are thinking more about the present than the future; however, planning for retirement is an important responsibility to ensure you will be able to end your career and retire comfortably. If you have not thought about how much you should be saving, you are not alone. Less than half of all Americans have calculated how much money they should be setting aside for retirement, although the average American spends about 20 years as a retiree. Even more surprising, some Americans do not even take advantage of their employers’ retirement benefits. According to the U.S. Department of Labor (DOL), 30 percent of American private industry employees who had access to a defined contribution plan like a 401(k) did not participate in 2012. At Elite Insurance Solutions, our agents are here to help our clients with all sorts of financial planning. We would like to share with you some retirement planning tips from the DOL to help you get started on preparing for the future.
Once You Start Saving, Keep Saving and Stick to Your Goals.
If you are not currently setting money aside into a retirement account, you can still get started now. Begin with a small amount and increase how much you save every month. The sooner you start saving for retirement, the more your money will grow, although it is never too late to get started. If you already are saving, keep it up. Stick with your plans to achieve your goals.
Know How Much You Will Need for Retirement.
In order to set the proper goals for saving, you will need to calculate the amount you will need to maintain your standard of living. The DOL estimates you will need between 70-90% of your preretirement income. Once you have determined how much money you will need, you can then begin properly planning your savings strategy.
Make Contributions to Your Employer’s Retirement Savings Plan.
If there is one available, sign up for your employer’s 401(k) plan or other retirement plan and contribute as much as you can. Your employee may match your contribution, you will lower your taxes, and you save without even thinking about it with automatic deductions.
Remember the Basic Investment Principles.
Inflation and the types of investments you make have a lot to do with how much money you will have at retirement. Learn about your plan’s options for investment, and place percentages of your savings into different types of investments. When you diversify your savings, you reduce risks and get a better return. You may want to change your arrangements depending on your age, goals, and financial situation.
Open an Individual Retirement Account (IRA).
You can invest up to $5,500 a year into an IRA, and when you turn 50, you can contribute even more. Providing an easy way to save, you can still receive tax benefits with an IRA. The specifics of your benefits depend on if you open a traditional IRA or a Roth IRA.
Want more retirement savings tips? Contact Elite Insurance Solutions to ask our agents anything you would like to know about planning for retirement.