October 22, 2021

How To Celebrate National Retirement Security Month

According to PwC’s Retirement in America Report, 1 in 4 Americans have no retirement savings at all. Of those who are saving for retirement, only 36% feel like their retirement planning is on track. The median savings is estimated to be $120,000 for those approaching retirement (ages 55 to 64), which provides less than $1,000 per month over a 15-year span. This is not enough for most people’s standard living expenses and it doesn’t take into account rising life expectancy and increasing healthcare costs.  

With this reality, it is now more important than ever to start planning and saving for your retirement. And what better time to start planning for your retirement than in October, the official National Retirement Security Month.   

History of National Retirement Security Month:   

Every year since 2006 the third week of October – this week – National Retirement Security Week is celebrated. The idea was introduced by Senators Gordon Smith (R-OR) and Kent Conrad (D-ND) to raise public awareness about the importance of saving for retirement and encourage employees to save and participate in their employer-sponsored retirement plans. In 2020, the National Association of Government Defined Contribution Administrators took it even further and updated its legislative priority to advocate to change it to National Retirement Security Month, instead of only the week.   

How To Ensure You Are On Track To Reach Your Retirement Goals   

  •  Set Your Goals  

It’s very hard to plan for your retirement if you do not have any attainable and measurable goals. But where do you start? First, determine the age you wish to be when you retire. For many people, this is around 65 years old, but it can be whatever works for you personally. 

Next, think about the kind of lifestyle you would like to have during retirement. Would you like to live in a luxury apartment by the beach or in a beautiful, isolated cottage in the mountains? Estimate your standard monthly living expenses, emergency fund, and healthcare costs when you are in retirement. Also, take into account your investing style and if you will receive Social Security benefits or any other income each year in retirement. Once you determine the amount you would like to have in your savings when you retire, then you can start planning accordingly in order to reach your goals.   

There are many free online calculators you can use to help determine your retirement savings goal. Here are a few to try out:   

Charles Schwab https://www.schwab.com/retirement-planning-tools/retirement-calculator   

Kiplinger https://www.kiplinger.com/kiplinger-tools/retirement/t047-s001-retirement-savings-calculator-how-much-money-do-i/index.php   

  •  Open a Retirement Account with your employer or an Individual Retirement Account   

If your employer offers a qualified retirement plan such as a 401(k) or 403(b), make sure to open an account. It is important to take advantage of this program, as it is easy to set up and start saving. You may even elect to contribute funds automatically out of your paycheck. In addition, your employer may offer a match, which is essentially free money that you do not want to miss out on.   

If your employer does not offer a retirement savings account, you can open your own Individual Retirement Account. This is a tax-advantaged account where you can choose to pay taxes later (Traditional IRA) or pay taxes now and take your funds out tax-free (Roth IRA). You may even consider opening a Self Directed IRA, which allows you to invest in alternative assets that most brokerage accounts do not offer such as real estate, cryptocurrency, or a private placement.   

Once you open your account, be sure to diversify your portfolio with stocks, bonds, mutual funds, and alternative assets to give you the most hedge against the volatile economy.   

  • Start Saving Now   

If you are young and just starting your career, retirement may seem like it is decades away. However, time goes by faster than many think. Those who start taking their retirement investing seriously earlier will benefit more in the end. Early retirement contributions accrue the most investment earnings since more recent contributions have a shorter window to grow before being withdrawn.   

For example, Sarah starts saving and investing in her retirement nest egg right as soon as she begins working at age 25 and John starts investing 10 years later at age 35. Both Sarah and John make $40,000/year, contribute 10% to their retirement plan, expect an annual salary increase of 2%, 6% annual rate of return, and wish to retire at age 65. At age 65 Sarah will have about $833,000.00 and John will have about $405,000.00 saved. By starting 10 years earlier, Sarah’s retirement account is double the amount of John’s.   

  •  Speak with a Retirement Plan Expert or Consultant   

Although people are aware that they need to save for retirement and may be enrolled in their company plan, many do not understand how their retirement vehicles work. Find an expert who can guide you through your questions and concerns and help you develop a strategy that meets your needs and goals.   

  •  Spread the Word    

Speaking about money and your savings may seem like a taboo subject. However, everyone will benefit by saving for retirement; it is not a competition. Consider sharing this blog post on your social media channels, asking friends how they are planning for their retirement, or setting up a meeting at work to discuss your employer’s retirement plan options.   

Handy Tips to Make Retirement Planning Easy:   

  • Automate Your Savings – Have your contributions automatically deducted from your paycheck to guarantee savings. You will never see the money until you retire which makes it easier since you do not have to think about it.  
  • Boost Your Contributions as You Age - Once you reach 50, you may contribute up to $7,000 to an IRA ($6,000 under 50) and $26,000 to a 401(k) ($19,500 under 50).   
  • Meet Your Company Match – Several employers will match a certain percentage of the money that you put into your retirement account. An employer match is free money, so be sure to take advantage of it.   
  • Diversify Your Portfolio – Invest in a variety of assets so that the volatility of one market does not affect your entire savings. For example, if the stock market were to crash and you had been invested in both stocks and real estate, you would still have a comfortable nest egg. This would not be the case if you were solely invested in stocks.  
  • Be a Savvy Consumer – The most common excuse for not saving for retirement is that a person does not have enough disposable income.  However, there are many easy ways to increase your savings:
    • Unplug unused appliances   
    • Purchase store-brand items or generic medication when possible   
    • Visit the library for free books and movies   
    • Cancel any unused subscriptions for magazines, television, etc.   
    • Avoid ATMs that charge fees   
    • Ride your bike to local destinations to save money on gas   

One of the leading causes of concern in people of retirement age is that they did not save enough to maintain their standard of living. This concern can be diminished if you start taking planning for your retirement seriously as soon as possible. Planning for your future is paramount so why not start your journey to a richer retirement today? 

Reach out to us to learn how to get the set up process started.

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