The unstable economy has created setbacks for some people, regardless of age and income brackets. Perhaps among the most acutely affected have been those approaching retirement. Other factors have also contributed to the changing retirement landscape. Healthcare costs are on the rise for many, pensions have become scarce, and people are simply living longer. Every person’s situation is different and must be carefully analyzed. However, there are certain tools and questions to help determine your next steps to lead you down the path of financial stability when you are retired.
While there are many moving parts in determining your “retirement readiness” (e.g., social, family, emotional, and physical planning), your financial standing plays perhaps the most vital role. According to the Employee Benefit Research Institute, 28 percent of workers have no confidence that they’ll be able to afford a comfortable retirement. That’s up from 23 percent in 2012.
There is also confusion about retirement savings needs. When asked how much they believe they will need to save to achieve a financially secure retirement, 20 percent of workers surveyed said they need to save between 20 and 29 percent of their income, and 23 percent indicate they need to save 30 percent or more. What many people may not realize is that there are financial tools and professionals to help you stop guessing, and start planning realistically for retirement.
A smart first step is to estimate how much you will need to live comfortably once you stop working. You could end up needing anywhere up to 100% of your annual pre-retirement income, depending on your plans. Many variables contribute to arriving at an accurate conclusion. So it’s a good idea to consult with a financial expert, who can help you develop a financial plan that allows you to truly enjoy your golden years.
Next, figure out how you’ll meet those expenses. Look at what your main sources of retirement income will be (Social Security, pensions and annuities, savings, etc.). You can contact the Social Security office to determine your estimated benefits or use their online calculator to make estimates based on expected earnings. If you have a 401K, your provider likely offers tools to help you determine your retirement income, as well.
Ask your bank about a Roth Individual Retirement Account (IRA), which allows a person to set aside after-tax income up to a specified amount each year. Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA on your tax return, but if you satisfy the requirements, you’re looking at tax-free income in retirement. NVE’s IRA Specialist can provide expert advice on what IRA options make the most sense for your retirement needs.
Another option is to work longer. It’s probably not at the top of your list, but consider some of the benefits: continued salary, prolonged healthcare coverage, and fewer years spent relying on your retirement reserve.
To learn more about the retirement planning products and services offered by NVE Bank, visit our website. You can also contact NVE’s IRA Specialist at firstname.lastname@example.org, call us at 1-866-NVE BANK (683-2265), or visit your convenient neighborhood branch.