Retirement. It sounds relaxing. It sounds amazing. And for many of us, it sounds like a long way off. But as the saying goes, the days are long, but the years are short, and there is no time like the present to begin saving for retirement.
It takes a significant amount of planning, commitment, and discipline to get your retirement accounts to a place where they’ll be able to help you retire in your desired lifestyle. Since the average American spends roughly 20 years in retirement according to the U.S. Department of Labor, and that number continues to rise with advancements in modern medicine and technology, you should be prepared to spend at least that amount of time enjoying your golden years.
Here are a few tips that we communicate with our clients as we help them save for retirement:
- Stay the course: At the beginning of our retirement planning journey, we encourage our clients to set goals and then continue to help them stay focused on those goals throughout their saving years. By making your savings a priority, you will have more opportunities to do what you’ve always dreamed when you reach retirement.
- Estimate your needs: Most investment professionals agree that you’ll need at least 70% of your pre-retirement income to maintain your current standard of living once you retire. By estimating these needs ahead of time, we have a better chance of investing appropriately so we can help you attain that amount.
- Max out your employer contributions: If your employer offers a retirement savings plan, contribute as much as you can afford as soon as you can do so. Many employers offer matching funds, which can sometimes even double your retirement savings within a calendar year. Over time, the tax deferrals and compound interest that you earn in these accounts can go a long way!
- Invest in other retirement accounts: At this point in time, you can contribute up to $5,500 a year into an IRA. You can also invest in other investment accounts, like ETFs, mutual funds, and managed money accounts, that can all help you save additional assets for retirement.
- Learn about other investments: Investments like annuities and alternative investments can potentially help you supplement your retirement income alongside traditional investment accounts. These should be considered based on your needs and your risk tolerance.
- Consider Social Security benefits: Most Americans will be eligible for some level of benefits from Social Security, which on average equal about 40% of what you earned before retirement. While this money is helpful, it by no means is enough for most Americans to live on through their retirement years. However, we always consider it when putting together our clients’ retirement plans.
Saving for retirement is a huge undertaking, and should not be taken likely. It’s best to work with a trusted advisor to put together a plan that works in your best interest and centers on reaching your goals. We’d love to talk to you more about how we can help you do that. Simply contact us to learn more!