We’ve all heard the stats. The majority of Americans are missing retirement savings targets, and more than 100 million working adults don’t even have retirement assets.
The bottom line is that Americans aren’t saving enough, and it’s concerning. People are living longer and spending more time retired, contributions to company pension plans have decreased, and future Social Security benefits are uncertain. But there’s good news: With some preparation today, you can maximize your retirement income for tomorrow. Follow these steps to starting your retirement fund.
1. Identify Your Needs
As you’re starting your retirement fund, evaluate your potential future income needs. For example, will you live in your current home or will you downsize? Will you travel? Will you have a summer or winter home? Will your family depend on you for financial assistance? Once you’ve identified your needs, you can outline how you’ll achieve them.
2. Evaluate Your Current (and Future) Situation
Your retirement funding will depend on your sources of income and your expenses now and in the future.
- Do you have an employer-provided retirement plan you can contribute to? Pension plans or 401(k) contributions may make up the bulk of your retirement funding, but more than a third of private sector workers don’t have employer-sponsored plans.
- Can you see yourself working a part-time job during retirement? If so, you could earn some supplemental cash and keep the boredom at bay.
- Are you counting on Social Security income? Though the future of Social Security is uncertain, it’s expected to be paid in full through 2037.
- What will your ongoing expenses be like? Americans are living longer, but they’re also paying more for healthcare. Consider these and long-term care costs as you’re planning for retirement.
- Will you have any outstanding loans you’ll need to pay during your retirement years? Be sure to account for mortgage, car and other payments as you’re running the numbers.
3. Consider Your Retirement Fund Options
You can grow your retirement funding using a variety of investment vehicles. In fact, several options, such as an IRA, can help you defer or avoid federal income tax on earnings.1 You can also choose from stocks, bonds, money markets, CDs, mutual funds or annuities.
What type of investment portfolio is right for you? It depends on how many years away from retirement you are, your financial objectives and the risk you’re willing to take to achieve your goals. Even small, regular savings can add up over time. The earlier you start saving for retirement, the longer you can take advantage of compound interest and tax-deferred growth on your money.
Start Your Retirement Fund Today
Retirement can seem like a far-off dream. But whether your plan to retire in 10, 15 or 30 years, taking charge today means financial security tomorrow. Connect with your local Farm Bureau agent today to learn more.
1 Neither the Company nor its agents give tax, accounting or legal advice. Please consult your professional adviser in these areas.