Today, only 43% of Americans have calculated how much they need to save for retirement. Even if retirement seems like it’s a long way off, it’s important for you to start saving for retirement now. Here are some resources to help you get started.
Start saving now to take advantage of compound interest.
Set goals for annual and long-term saving.
Stick to your plan. Remember to invest in yourself!
How to Start Planning for Retirement
It’s never too early to start planning and saving for retirement. Whether you’re just joining the workforce or retirement is on the horizon, here’s what you can do to make sure you’re financially prepared.
Experts estimate that you’ll need about 70% of your pre-retirement income—for lower earners, 90% or more—to maintain your standard of living when you stop working.
If your employer offers a plan, check to see what your benefit is worth. If your employer doesn’t offer a retirement plan, suggest that one be started.
You can put up to $6,000 a year into an Individual Retirement Account (IRA) and gain tax advantages.
If your employer offers a tax-sheltered savings plan, such as a 401(k), sign up and contribute all you can. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy.
Don’t dip into your retirement savings. You’ll lose principal and interest, and you may lose tax benefits.
The Social Security benefits you (and a spouse) will receive at retirement can be estimated based on your average annual income, your current age and your age when you retire.
Learn About Compounding Interest
When interest is added to the principal of a deposit which also earns interest, this is called compounding. With compounding, you’ll see your account grow more quickly. Compound interest is the type of interest that you are looking for when it comes to investing money.
With compound interest, saving a little bit now means earning a lot more interest later. Einstein called it “one of the most powerful forces in nature,” and it’s true. Like a snowball, the more you add to what is there, the more it grows…and grows…and grows…
- Retirement Savings
See how long your retirement savings will last based on your savings and inflation.
- Retirement Income
Determine what your monthly retirement income will be.
- Roth vs. Traditional IRA
Compare the difference in savings over time with a Roth and Traditional IRA.