About 40 percent of the workforce have no retirement funds, according to the National Institute on Retirement Security. The organization used census data to extrapolate this exertion, with most households not being on track. This applies in particular to middle-aged people and those under 50 years of age.
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1. Saving 10 Percent Of Your Income Is Not Enough Anymore
Many financial experts note that most people should put away 10 percent of their earnings for their retirement fund. It is certainly true that you should regularly set aside money for retirement; however, unfortunately, 10 percent may not be enough of a substantial enough nest to live on after 65.
The American government assures that Social Security will still be around, but it is in your best interests to not rely on it entirely. Even people who are in an advantageous position will only average about $1249 a month as of March 2017. It’s best to be more conservative and use a comprehensive approach to accruing retirement income.
2. Take Advantage Of Employer Retirement Plans
Employers will match contributions to your 401K plan. For example, if you make more than $75,000 a year, your employer may match an appropriate gift of 50 percent, up to six percent of your total salary. By contributing six percent of your total salary – $4500 – your employer will contribute an additional $2250.
Thankfully, these additional earnings are deferred from additional taxation.
3. Don’t Cash Out Your Retirement Funds If You Are Changing Jobs
Rollover funds into the new company’s pension plans. If this isn’t appropriate, you’ll also have the opportunity to move these funds into a rollover IRA.
Most will wait until they are about 59 years old before they can withdraw without additional penalties. It’s in your best interest to minimize withdrawals until you’re ready to retire.
4. Don’t Underestimate The Value Of Staying Healthy
One of the biggest expenses post-retirement is healthcare. It is more of a wildcard, occurring at the most inopportune times. Expect illness to happen, and prepare your financial planning accordingly. Exercising, healthy eating and an active social life are a few things to help prevent any healthcare issues.
5. Benefits Of Professional Financial Help
Retirement preparation is not a one-size-fits-all solution. Seeking the help of a professional will give you the peace of mind knowing that you have maximized all possible avenues, and you will receive the ultimate in pension preparedness.
Even if you haven’t been actively contributing to your retirement fund, it is never too late to start. Careful planning will ensure that you maximize your options.