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Critter Corner: Top 10 Ways to Plan for Retirement

Dear Magic,

I am hoping to retire in the next 10-15 years. Do you have any tips to help me plan ahead?

Thanks

Rhea Tyre

Dear Rhea,

The U.S. Department of Labor recently released a helpful compilation of things you can do to plan for retirement. Below is a summary of some of their findings. Hope it’s helpful for you!

1. Start saving, keep saving, and stick to your goals: If you are already saving, whether for retirement or another goal, keep going!  If you’re not saving, it’s time to get started. Start small and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it’s never too early or too late to start saving.  

2. Know your retirement needs: Retirement is expensive. Experts estimate that you will need 70% to 80% of your preretirement income to maintain your standard of living when you stop working. Take charge of your financial future. The key to a secure retirement is to plan ahead.

3. Contribute to your employer’s retirement savings plan: If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute all you can to take advantage of your employers matching benefit.

4. Learn about your employer’s pension plan: If your employer has a traditional pension plan, check to see if you are covered by the plan and understand how it works. Ask for an individual benefit statement to see what your benefit is worth. Before you change jobs, find out what will happen to your pension benefit. Learn what benefits you may have from a previous employer. Find out if you will be entitled to benefits from your spouse’s plan.

5. Consider basic investment principles: Inflation and the type of investments you make play important roles in how much you’ll have saved at retirement. Know how your savings or pension plan is invested. Learn about your plan’s investment options and ask questions. Put your savings in different types of investments. By diversifying, you are more likely to reduce risk and improve return. Your investment mix should change over time depending on many factors such as your age, goals, and financial circumstances. Financial security and knowledge go hand in hand.

6. Don’t touch your retirement savings: If you withdraw your retirement savings now, you’ll lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in your current retirement plan, or roll them over to an IRA or your new employer’s plan.

7. Ask your employer to start a plan: If your employer doesn’t offer a retirement plan, suggest that they start one. There are a number of retirement savings plan options available. Your employer may be able to set up a simplified plan, such as a Simple IRA that can help both you and your employer.

8. Put money into an Individual Retirement Account (IRA or Roth IRA): You can put up to $6,000 a year into an Individual Retirement Account (IRA); you can contribute even more if you are 50 or older. IRAs can provide significant tax advantages. When you open an IRA, you have two options – a traditional IRA or a Roth IRA. The tax treatment of your contributions and withdrawals will depend on which option you select. The after-tax value of your withdrawal will depend on inflation and the type of IRA you choose.

IRAs can provide an easy way to save. You can set it up so that an amount is automatically deducted from your checking or savings account and deposited in the IRA.

9. Find out about your Social Security benefits: Social Security retirement benefits replace about 20-40% of a median wage earner’s income after retiring. You should be able to estimate your benefit by using the retirement estimator on the Social Security Administration’s Website, or better yet set up your free, personal my Social Security account, which allows you to receive personalized estimates of future benefits based on your real earnings. Sign up here. For more information, visit their Website or call 1-800-772-1213.

10. Ask Questions: While these tips are meant to point you in the right direction, you’ll need more information. Ask questions and make sure you understand the answers. Get practical advice and act now. Besides being a Certified Elder Law Attorney, Evan Farr is also an experienced retirement planning advisor and long-term care financial advisor through his financial services company, Lifecare Financial Services, LLC.

Retirement planners such as Mr. Farr generally work with people ages 55 and older, who are within 10-15 years or so of their desired retirement age. Learn more about our retirement planning services here.

For Department of Labor retirement advice and publications, click here.

Good luck to you!
Magic

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About Renee Eder

Renee Eder is the Director of Public Relations for the Farr Law Firm, and gives the voice to the Critters of Critter Corner. Renee’s poodle, Penny, is an official comfort dog who she and her children bring to visit with seniors who are in the early stages of dementia at a local senior home once a month.

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