The third week of October recognizes retirement. Retirement is a major life transition that impacts your finances, health and even social life. The average person lives in retirement for 20 years. The variety of ways to save money and what to do can be confusing.
Whether you plan to retire at age 35 or age 65 it’s never too early to begin saving. An Individual Retirement Account (IRA) is a great way for you to insure your financial future. Learn more about your IRA options through Metro Credit Union and we’ll be happy to get you the information you need to make the best decision.
“How much should I save?” many ask. Financial planners recommend that you save 10% to 15% of your income for retirement, starting in your 20s. But that’s just a general guideline. It’s a good idea to establish a savings target – one that tells you roughly how much you should set aside over time to meet your retirement goals. The CNN Money Ultimate Guide to Retirement can help you get started on your planning for retirement and what to do when you are retired.
If you’re still young and you can’t save enough right now, don’t be discouraged. Your income will probably grow as you progress in your career, allowing you to save more. But make sure to not miss out on any employer matching contribution plans once you meet qualifications and are vested. This benefit effectively increases your income without increasing your tax bill, since you pay no taxes on matching contributions until you withdraw them in retirement. You might also have other opportunities to boost your savings rate; for example, a bonus or inheritance can make a big difference in your long-term prospects if you invest some of the money in retirement accounts.
You can reduce the amount you need by working past the traditional retirement age, allowing you to postpone withdrawals from your retirement accounts. Your savings will have more time to grow, and you’ll reduce the number of years you’ll need to draw on them. But the problem is that you don’t know if you’ll have the interest or energy to work at an advanced age – or if you’ll have health problems that prevent it.
The United States Department of Labor website: http://www.dol.gov/ebsa/publications/10_ways_to_prepare.html
CNN Money Retirement Guide: http://money.cnn.com/retirement/guide/basics_basics.moneymag/index.htm