Are you one of the countless adults who would rather get a dental filling than think about your retirement plan? This week is National Retirement Planning Week. It was created to help people focus on making choices to create a stable financial future for themselves. If you aren’t sure if you’ll ever be able to retire, you are not alone. However, if you’d rather not work until you die, read on.
How do you get started? Whether you are 5 years or 35 years from retirement, the time to make a plan and start saving is today. Actually, it was yesterday, but we can only work with where we are today.
1) Maximize Your Employer’s Plan
If you have a job, you might be lucky enough to have an employer-sponsored retirement savings program, such as a 401(k) account. If you have access to a plan like this, contribute as much money as you possibly can each month. If you have an employer match, you want to be sure to take advantage of this free money. An employer match means that your organization will add an amount to your account that equals the amount you contribute, up to a certain amount – typically 1-3%.
2) Save On Your Own
Many of our parents and grandparents were rewarded for a lifetime of working by earning a pension that would send them a check every month to cover their retirement costs. Today, most employer plans will not cover the full amount needed for retirement. This means that each of us must save money outside of our workplace plan. How much do you need? Should you be saving 5% or 25% of your take-home-pay? The answer to this question will depend on several factors, such as when you want to retire and what type of lifestyle you want to have in retirement. There are many online calculators to figure out how much you’ll need to save. I like this one: Ballpark E$timate because it is easy to use.
3) Keep Learning
Now that you’ve calculated how much you need to save on your own each month, where do you put it? Do you choose a traditional IRA, Roth IRA, stock mutual fund, or something else? This is where you need to start reading on your own, and possibly speak with a financial advisor. The Department of Labor has a terrific little book about retirement planning that is free online: Taking the Mystery Out of Retirement Planning. If you’d like advice from a retirement professional, find a certified financial planner here.
4) Start Now!
Now that you’re thinking about retirement, make a plan or add to your savings today. Here are two resources for additional information:
National Retirement Planning Coalition: www.RetireOnYourTerms.org
National Endowment for Financial Education: www.MyRetirementPaycheck.org
Author: Betsy DeMatteo, Family & Consumer Science Educator, Ohio State University Extension