Tips to Jump Start Your Retirement Savings
Are you saving for your retirement?
Believe it or not, 36 percent of Americans are not currently setting anything aside for their golden years, according to a recent poll by Bankrate. Even more alarming is the fact that fully 25 percent of the poll’s respondents between the ages of 50 to 64 have not put a single dime away for their future.
Not surprisingly, The Employee Benefit Research Institute’s 2014 Retirement Confidence Survey paints a pretty dark picture. Only 18 percent of American workers reported being very confident that they’ll have enough money to comfortably retire, and 58 percent admitted to struggling with household debt.
That’s pretty scary, and even more daunting is the fact that less than 50 percent of workers even know how much money they’ll need to comfortably retire. According to the U.S. Department of Labor, the average middle class American will need at least 70 percent of their pre-retirement income to maintain their standard of living over a 20 year period. For lower wage earners, that number climbs to over 90 percent.
The good news is you that, no matter what your age, you still have options:
Be Honest and Start Saving
Even if your in your fifties and haven’t saved a nickel, modest contributions to a dedicated bank account can make a big difference. If you don’t think that’s possible, be honest with yourself and take a hard look at your spending habits. Nobody wants to make sacrifices, especially in good times, but small lifestyle changes can start you on the road to growth. Start by making a list of your mandatory monthly expenses (rent/mortgage, car, gas, groceries, etc.) and subtract the total from your monthly income. The remainder is where you’ll find your savings potential. How much remains will depend on the unnecessary expenses you’re willing to cut.
Think about it: Giving up your $5.00 a day Starbucks habit could put upwards of $150.00 month into your savings account!
Take Advantage of Your Employer’s Retirement Savings Plan
Did you know that 30% of workers didn’t participate in their employer’s 401(k) plan? That’s crazy! Find out about your employer’s plan and how much you’ll need to contribute to get their full matching contribution. Then, contribute as much as you can, using automatic deductions from your paycheck, so you get used to living on a little less. Over time your account will grow, and, in the short term, you’ll see a savings on your tax bill every year.
Start an IRA
If you can’t handle the contribution levels of your employer’s 401(k) plan, consider funding a traditional or Roth Individual Retirement Account (IRA).You can deposit up to $5,500 per year if you’re 50 years old or younger, and up to $6,500 for older workers. The big advantage to IRAs is that when you retire you pay no income tax on approved withdrawals.
We’re Here to Help!
Preparing for retirement can be a challenge, and reaching financial security requires good planning and a commitment to save. Snyder Insurance and Financial Services can help with the right strategic direction. Contact us today to discuss how we can make your retirement years as golden as they should be!