Financial security is essential when it comes to retirement. Unfortunately, the level of security needed does not simply happen. It takes ample planning, a high level of commitment, and – most importantly – money.
Retirement is a time that allows you to experience higher levels of control over your time and allows you to experience the leisure that you have dreamed of during your adult life. The money that is present during your retirement must be dependable and accessible for many years to come. In this guide, we will expound on strategies that will help you successfully save for your retirement so that the last years of your life may be the best years of your life!
Preparation is the Foundation to Success
Throughout our lives, we all experience changes in terms of our financial affairs and needs. Regardless of where we are in life and our current age, it is imperative that we place a focus on saving for our retirement.
Experts have provided various pointers through the years on how much must be saved. As a general rule of thumb, we should all strive to reach as close to $1 million as possible. If that seems a bit overwhelming, perhaps you could go on the financial advice of saving 12 times that of your salary prior to retirement.
The following offers additional strategies for putting back money for retirement:
- Let’s say that you make $50,000 a year. By the time that you are 30 years old, you should have – at least – one year’s salary put into the bank for your retirement.
- By the time that you are 40 years old, you should have – a minimum – of three times what you make each year saved for your retirement.
- Once you hit 50, six times what you make each year should be banked.
- By 60, eight times of your yearly salary should have been saved for your retirement.
- By the time you are 67, you should have a total of ten times your annual salary saved in the bank for your retirement.
Retirement Income Requirements
In order to determine exactly how much will be needed in retirement, you must consider what expenses and debts may be experienced during that time in your life. Then, you will need to consider how much you will have in savings and what your retirement income will be. If possible, it is best to avoid carrying debts into retirement.
Your retirement plan should include paying down any outstanding debt. Additionally, you should set aside money for your healthcare needs, prescription costs, and any long-term care that may be needed during that time in your life.
The money that you elect to save for your retirement should be placed in an FDIC-insured bank account. This insurance protects your money in the event that the bank experiences some type of failure. This type of insurance is provided automatically for any type of deposit-based account that is opened at a bank that is FDIC-insured. The insurance covers – at least – up to $250,000 for each depositor. When opening an account for retirement funds, verify with the financial institution that the account is protected by this insurance.
When saving for retirement, you must include housing expenses. This includes payments, property taxes, insurance, maintenance, repair costs, and other types of expenses. You should also consider any type of adjustments that must be made to accommodate you as you grow older.
In addition to this, it is imperative to consider the location of where you reside in terms of proximity to your doctor, the grocery store, and any type of public transportation. If your current housing will not work, you will need to save for appropriate housing.
Employer’s Retirement Plan
If you work for an employer that offers a retirement plan, you should sign up and contribute as much as possible. Not only will you save on taxes, but the more that you contribute, the more your employer is likely to contribute.
As time passes, you will find that the compound interest and the deferrals – as far as taxes are concerned – will help you in accumulating quite a bit.
Individual Retirement Account
It is possible to put up to $6,000 each year into an Individual Retirement Plan (IRA). If you are over the age of 50, it is possible to place even more into the account. There are several types of advantages to each of the two types of IRAs – traditional and Roth.
This is a very easy way to save money. You can arrange it with your bank so that whatever you want to place within the account is automatically taken from the checking or the savings account that you own and transferred into the IRA through deposit.
Leave Retirement Savings Alone
Any amount of money that you put into a retirement savings should be left alone. If you withdraw it, you will find that you lose both the principal and the interest associated with the money. Additionally, you may lose any associated tax benefits.
It is possible that you will have to pay penalties for early withdrawal, too. In fact, you should create a special account at your bank that is designated just for retirement savings. Ensure that it is one that offers interest so that your funds are able to grow quickly.
Start Preparing Today
If you are ready to start preparing for your retirement, you should start today. We here at Somerville Bank have financial specialists that are standing by to assist you. We can help you with a wide range of financial options for your retirement.
Our bank is FDIC-insured and our specialists will be able to advise you on the best manner to save for retirement. If you would like to learn more about financial planning, checking and savings, retirement planning, loans, and other information to keep your finances in tip top shape, visit one of our many locations or call one of our branches today: https://somervillebank.net/locations/