Imagine your best retirement
Do you remember when you were sixteen? If you were like me you couldn’t wait to be twenty one…and it always seemed so far away. Now that we are working adults, retirement, like waiting for adulthood, may seem far off into the future but looking back we can see it came all too fast. Thinking about retirement is not always on your radar and when it is, it may be limited to looking at your savings account balance every so often or at least consider starting one.
Retirement planning is much more than just saving – it’s about saving with purpose. There is value in knowing what you will be doing day-to-day when retirement comes and it is essential how you will arrange an income for yourself when that inevitable time comes.
So, how much is enough?
For each of us that answer is different. A good place to start is with your imagination – visualize yourself in the future and then plan for that vision so you can take meaningful action on a regular basis to cover all of it. Such as, where you will live, how you will spend your time and any adventures you may wish to have so you can provide future resources to live your best retirement. The general rule of thumb has experts recommending you save at least 70%-80% of your pre-retirement income.
Once you have envisioned how you will live in retirement, you will want to understand how much income you can provide yourself to support that vision. Using tools that can show you how your current savings will translate into income in the future - will help you refine your savings or modify your vision so you can get there. One such tool is myOrangeMoney®, an online interactive educational experience that will demonstrate your projected retirement income and any gaps in savings you may have.
Remember, if you identify a potential income gap there are a few simple steps you can take now to support your savings goals within every life stage such as:
- Create a budget to reduce spending and pay down debt while saving.
- Save more by increasing your contribution % rate if you have a tax-deferred employer retirement savings plan. The IRS limits for 2018 is $18,500.1
- Pay yourself first, save as much as you can as early as you can and take advantage of compounding interest
- Don’t leave money on the table. Take advantage of employers matching contributions to 401(k) or 403(b) plans if offered. Contribute at least the same amount
- Consider and compare additional flexible Roth IRAs or Roth contributions to your employer plan.
- Simplify your life and automate your accounts such as bill pay, savings and if your plan offers it, auto escalation of retirement plan contributions to keep you on track.
- Ask your advisor or employer about target date funds that will auto adjust your investments as you get closer to retirement.
- If you are 50-years of age or older, you can save an additional $6,000 yearly in catch-up contributions (2018 IRS limits)1.
Just like when we were sixteen, everything seemed so far away and it was as if becoming an adult granted us some kind of superpowers, or so we thought – at the very least – granted us more freedom. For most of us, we came to learn, with freedom came responsibility. That was then. This is now and the same applies to retirement planning.
You can help bridge any potential income gap with various savings strategies. For clarity, talking with a financial professional can help you understand what is right for you to balance your income strategy. So make the most of what you have now to pay yourself later - so you can better enjoy the freedom that will come with the retirement you’ve imagined.
Neither Voya ® nor its affiliated companies or representatives provide tax or legal advice. Please consult a tax adviser or attorney before making a tax-related investment/insurance decision.