How do you get
started saving for retirement?
For generations,
people were able to fund their retirements with Social Security and
pensions, but today a large portion of Americans must rely more on
personal investments and earnings to support their retirements. When
you have bills to pay and lots of other priorities demanding your
money, saving for retirement may seem like something that you can
put off. But the sooner you start saving, the more you can use time
to your advantage. Having a successful retirement means balancing
retirement saving with your other life goals, and making retirement
saving a top priority. The earlier and more aggressively you start,
the better your eventual result can be. You can start with a
discount brokerage firm by opening an IRA or take advantage of your
employer's 401k or retirement plan...Point being, NOW is the time to
start. The longer you wait the less money you will have saved away.
Are you saving
enough?
Whether you've been
saving for years or are just getting started, one fact is
undeniable: to help make sure you're able to enjoy the retirement
you envision, you have to not only save, but also have a plan.
There are two key
steps to starting the planning process:
1.
Understand how much you'll need to have saved in order to retire
comfortably
2.
Determine your savings rate — the amount you'll need to save each
month or year to reach your target.
Once you complete
these key steps, there are several other tasks that will help to
ensure the success of your retirement plan. You'll need to determine
the type of accounts you should use, choose your investments, and
then take precautions to protect your savings. From there, the focus
becomes managing your plan on an ongoing basis.
Determine
how much you will need.
A key concept in
retirement readiness is establishing the amount of annual income
you'll need from your savings during retirement. How much of your
current — or future — income will you seek to replace in retirement?
Retirement income and expense needs vary greatly among retirees so
taking even a few minutes to estimate expenses can yield a better
result for your own situation. Of course, the closer you are to
retirement, the easier it may be for you to estimate this figure.
You'll need to
take into account a number of variables, including:
-
How much you currently have saved
-
How you are invested (your asset allocation)
-
When you plan to retire
-
Any income you expect in retirement, such as Social
Security, pensions, or other annuities
-
How long your assets need to last
-
Your spouse or planning partner's situation
The earlier you
start, the more you will see your money grow. Start now and enjoy
the benefits later!
