Periodically you ought to review your retirement strategy to ensure you are taking advantage of all available tools and resources that can help you build your retirement income. Your ability to save more money now (the earlier, the better) will provide you with a nest egg that will help support the comfortable retirement you’re working so hard toward. Think about these five steps to stay on the path to your retirement goals:
Calculate your retirement income needs. It’s never too soon or too late to start saving for your future. Now that people live longer than ever before, you may require income for 20 or 30 years after you quit working. Will the income from your nest egg be able to keep up with inflation over this extended period of time? For example, even with a 4% annualized rate of inflation, the cost of goods and services could double in approximately 20 years, or less. Keeping this in mind, you can start to look at your current financial strategy to determine whether your assets and savings will meet your retirement income needs.
Don’t count on Social Security for all your income needs. With the uncertainty of Social Security and the decline of company-sponsored pension plans over the past several decades, the responsibility of saving for retirement income has shifted from employers to employees. Depending on your specific circumstances when you reach retirement, Social Security alone may not be enough to provide you with the income you’ll need to live comfortably in your “golden years.”
Save, save, save. Take some time to go over your household budget. Even making minor adjustments to re-allocate some cash to savings versus consumption can make a big difference. Sometimes the effort snowballs, and you begin to enjoy cutting the budget and watching your savings grow.
Take full advantage of your company plan. If you are not already, consider contributing the maximum amount to your employer-sponsored retirement plan. Not only does this allow you to take full advantage of pre-tax contributions that accumulate on a tax-deferred basis but many employers match employee contributions, which helps to further increase the value of your account.
Consider using personal tax-advantaged alternatives. Individual Retirement Accounts (IRAs) and nonqualified plans can also provide additional tax-deferred savings opportunities. Making sound use of these vehicles can really help push you toward the finish line.
You Are In Charge
Retirement may seem very far away, however the sooner you begin taking advantage of all the opportunities you have to save for retirement, the better prepared you will be for your well-deserved retirement years. Remember to take some time to revisit your retirement strategy on a regular basis. Consult with a financial professional to have someone on your side, keeping you focused on the path to your financial future.