Whether you’re just starting out in your career, or have been working steadily for years, it’s important to start saving for retirement as early as possible so that you have compounding interest on your side. Because Social Security may only cover about 20% of your retirement income and personal savings will be required to meet your remaining needs, developing a strategy and knowing your savings options are great steps to take when planning for your golden years.
Developing a strategy for retirement
What do you plan on doing when you retire? This affects how much you will need to budget for your retirement. Most experts estimate that monthly expenses after retirement are equal to 70-90% of your working income. Retirees tend to spend more than they expect with exciting vacations and new hobbies. A good way to plan for your future is to keep a journal for a few months of every dollar you spend. This will help you to determine whether your goal budget is feasible or not.
Knowing your retirement saving options
Company plans, such as 401(k)s, offer simple opportunities to build up your retirement funds. You can contribute directly from your salary, free of taxes, and the earnings made on the gains of the contributions is also deferred until withdrawal. Another common retirement savings option is through an Individual Retirement Account (IRA). A big benefit of investing in an IRA rather than other investment accounts is that the earnings you make on your investments are tax deferred, which allows your money to grow faster than it would in a similar taxable account.
To learn more about Personal Retirement Planning*, visit us on the website at: www.firstmid.com/retirement/personal-retirement-planning/
*Some investment products and services are not deposits, obligations or guaranteed by the bank; not insured by the FDIC or any other governmental agency, and may be subject to investment risk including potential principal loss.
