Small but Impactful Ways to Save for Retirement
Retirement is an exciting chapter in your life. You get the freedom to do the things you love, whether it’s continuing your education, traveling the world or simply spending more time with family.
It’s important to start building up your savings before retirement so you can cover any costs, like cost of living and health care. But according to recent reports, only half of Americans have calculated how much they need to save for retirement.
Remember that it's never too late to start, no matter if you’re four years from retirement or forty. Here are some tips to help.
Determine your savings goals
Americans spend about 20 years in retirement, on average. It’s estimated that you need around 70 to 90% of your pre-retirement income to maintain your standard of living when you stop working. Planning ahead is the best thing you can do to have a secure retirement.
Think about your current cost of living and how much you can afford to put away each month. Start off with small contributions and try to increase the amount you save each month. What’s important is getting started as early as possible. Once you come up with your plan, try to stick to it.
Check your employer benefits
Many employers offer retirement savings plans, like Thrift Savings Plans. Try to contribute as much as you can. If these plans offer automatic contributions, sign up for it. You won’t have to remember to do it every month and you’ll be surprised how much will add up without you realizing it.
Diversify how you save
What you’re putting away for retirement is important, but so is how you’re putting it away. Take stock of how your money is currently being saved. Is it being invested? What is it being invested in? Putting your savings in different investments reduces your risks and will help improve your overall return.
Account for Social Security
The Social Security Retirement benefit is a monthly check that replaces part of your income when you reduce your hours or stop working. This typically replaces around 40% of pre-retirement income for beneficiaries. You may be able to estimate your benefit by visiting the Social Security Administration’s website or calling them at 1-800-772-1213.
Don’t be afraid to ask questions
Financial health can be a complex picture, especially when everyone’s retirement needs are different. It’s okay to ask questions, even for the ‘basic’ things. Doing research will help you better understand your goals and have a more secure retirement.
Plan for health care costs
While you may be healthy now, our health changes as we get older. Having savings means you can get the care you need. Even though you can’t predict what your health will look like, you can update your savings goals as time goes on.
Sources:
https://www.irs.gov/retirement-plans/plan-participant-employee/saving-for-retirement
