Saving for retirement is a stressful topic for many families. Trying to find ways to put away enough money to enjoy retirement while also balancing raising children in an economic climate of uncertainty can be overwhelming to some people. Fortunately, it is possible to successfully save for retirement. Here are some helpful steps to consider throughout your working career.
Overarching savings tips
It is always a good idea to examine any retirement options offered by employers. Many companies will offer a 401(k) and will match contributions made to the account. Since money added to a 401(k) is subtracted pre-tax, it will lower your taxable income, which is always a nice benefit. IRAs are another savings product people often use for retirement savings. At Belmont Savings, we can help you save and increase your savings using an IRA, one month to five year CD’s, and our current 1.00% APY PlatinumBlue High Rate Savings account.
During your 20’s
When it comes to saving for retirement, the earlier you can begin, the easier the entire process will become. Ideally, in your 20’s you should be looking to save at least 10% of your income, with the understanding that you will look to grow this percentage to 20% and 30% as you age. Check with human resources departments at work to see if they sponsor financial counseling or advice to help ensure your long-term goals are in place.
During your 30’s
By the mid 30’s, you should look to have a minimum of 1x your current salary in savings, although those wishing to retire by their 50’s or early 60’s should have more tucked away.
During your 40’s
By the mid 40’s, you should look to have at least 3x your current salary in your retirement accounts. Wealth management counselors can be very helpful for those looking to balance retirement savings while paying for children’s college and other major expenses.
During your 50’s
The goal for your mid 50’s should be to have at least 5x your current salary in savings. By this time many parents have become empty nesters, so it is best to maximize the amount you can add to the retirement accounts from each paycheck. The IRS also allows you to contribute an additional “catch up” amount to your IRA and 401 (k) beyond the maximum of what people under 50 can contribute. In 2013, this allows you to contribute an additional $1000 to your IRA and $5,500 to your 401(k) each year.
During your 60’s and 70’s
During your 60’s shift your portfolio to security rather than growth. This will assist in minimizing the risk of your investment declining before opting for retirement. Evaluate your savings against retirement goals. Many financial professionals recommend having a minimum of 8x the ending salary saved to successfully retire completely. Once you feel comfortable, enjoy your retirement!
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This blog article is not tax advice; please contact your tax or financial advisor for further information.