Start Planning for Retirement - Map Out a Plan, Savings & Investing
The boomers are now looking forward to another chapter in life, as age comes with the territory and life is paving the path for new generations. Yet millions of adults have not given thought to retirement and many who have consider it a thing too far away to be concerned. As a result, the thought is quickly dismissed as day to day responsibilities and pressing issues take priority. But we’ve heard it repeatedly, “start planning for retirement”. Planning early is the key to financial security, and most importantly the key to enjoying retirement.
In a report compiled by Alicia Munnell of the Center for Retirement Research at Boston College, she noted that “the wealth to income ratio for current workers is a good way to gauge retirement preparedness, and during the period 1983-2007 surveys revealed quite an impressive ratio.
However, in 2010 as a result of the economic crisis the ratio took a significant blow, and many boomers will need a higher wealth-to-income ratio to live comfortably or be as well off as their parents”.
Map Out a Plan
As the masses of the baby boomers’ generation approach retirement age, the prospect becomes more daunting for those who have zero or very little saved, and even those who were saving have been severely impacted by layoffs, declining property values, failing investment portfolios, and almost a decade of a declining stock market. A survey by the Employee Benefit Research Institute revealed that more than half of all workers (60%) say they have less than $25,000 saved, and more than half of retirees (54%) have less than $25,000 saved. You may have to forgo the ideal retirement lifestyle you envisioned, but you shouldn’t forgo savings. Mapping out a clear plan that includes savings and investing will guide you towards achieving your goals, or at least make a difference, if you remain focused and consistent.
Start Saving & Investing Now
Inasmuch as planning early is the key, knowing how you wish to spend those years, will help in determining your financial needs. According to the experts, Americans will need between 70-80% of their pre-retirement wages to live the way they currently do or maintain a comfortable standard of living during retirement. Regardless of age or plan getting started always begins with savings and the time to start is now.
Today there are many choices when it comes to saving for retirement. Below is a list of savings & investment plans. Most likely one or more of these plans could be of great benefit to you.
Savings Account: If you’re not saving, start now by opening a savings account and begin making regular deposits. If you already have a savings account be disciplined in saving consistently and increase the amounts as time goes by.
401K Plan: If your employer has a 401k plan, make savings compulsory by investing in the plan, and make the maximum contribution if possible. Your employer will withdraw from your salary the contribution you wish to make. Some employers will also match a your entire contribution or a portion based on years of service with the company or other criteria. This varies according to employer.
Generally 401K plans are endorsed by employers, but mainly operated by investment firms that offer a number of investment options; accompanied with a certain degree of risk. Do your own research, speak with the experts and find a trusted advisor if possible. Regardless, this is a great way to save.
If your employer does not have a 401k plan, find other employees who are interested and get your employer to start one. Otherwise, contribute to your own retirement plan, by opening an IRA which may afford you many of the same advantages. In addition, there are some tax laws you should be aware of.
403B Plan: If you work for a non-profit or educational organization, you may qualify to join their retirement plan. These type of organizations fall under the 501 (c) (3) code of the Internal Revenue Service. Those eligible to participate are teachers, ministers, professors, nurses, doctors, researchers, and librarians.
457B plan is a non qualified tax deferred compensation retirement plan for state and local government employees. There are tremendous advantages for participants in this plan. Not only are contributions tax deferred, but earnings on contributions invested are also deferred.
The Solo Plan, Keogh Plan, Simple IRA and the SEP are also retirement plans specially designed by law makers with lenient tax measures to assist the self employed with savings for retirement.
Other Investments: Outside of your employer’s saving plans, there are other savings and investment options available such as the Roth and Traditional IRAs, Mutual Funds, Annuities, CDs and Exchange Traded Funds (ETFs). Tax laws and other changes are continuously taking place in the investment world, so keep abreast of new developments and keep a close eye on your money.