1.Facts n Fewer than half of Americans have calculated how much they need to save for retirement.
2.In 2014, 30 percent of private industry workers
with access to a defined contribution plan (such
as a 401(k) plan) did not participate.
3.The average American spends roughly 20 years
in retirement.
Putting money away for retirement is a habit we can
all live with.
Remember…Saving Matters!
1. Start saving, keep saving, and stick to your goals
If you are already saving, whether for retirement
or another goal, keep going! You know that saving
is a rewarding habit. If you’re not saving, it’s time
to get started. Start small if you have to and try
to increase the amount you save each month. The
sooner you start saving, the more time your money
has to grow (see the chart below). 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 at least 70 percent of your retirement
income – lower earners, 90 percent or more – 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. Start by
requesting Savings Fitness: A Guide to Your Money
and Your Financial Future and, for those near
retirement, Taking the Mystery Out of Retirement
Planning.
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. Your taxes will be lower, your company
may kick in more, and automatic deductions make
it easy. Over time, compound interest and tax
deferrals make a big difference in the amount you
will accumulate.
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. For more information,
request What You Should Know about Your
Retirement Plan. (See back panel for more
information.)
5. Consider basic investment principles
How you save can be as important as how much
you save. 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 this way, you are
more likely to reduce risk and improve return.
Your investment mix may change over time
depending on a number of 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 it start one. There are a number of
retirement saving plan options available. Your
employer may be able to set up a simplified plan
that can help both you and your employer. For
more information, request a copy of Choosing
a Retirement Solution for Your Small Business.
8. Put money into an Individual Retirement Account
You can put up to $5,500 a year into an Individual
Retirement Account (IRA); you can contribute even
more if you are 50 or older. You can also start with
much less. IRAs also provide 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. Also, 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.
A new type of Roth IRA is called myRA, a
retirement account created by the U.S. Department
of the Treasury to help you save for retirement if
you don’t have access to a plan at work. For more
information, visit myra.gov.
9. Find out about your Social Security benefits Social Security pays benefits
that are on average
equal to about 40 percent of what you earned
before retirement. You may be able to estimate your
benefit by using the retirement estimator on the
Social Security Administration’s Website,
www.socialsecurity.gov. 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.
Read our publications listed on the back panel.
Talk to your employer, your bank, your union, or a
financial adviser. Ask questions and make sure you
understand the answers. Get practical advice and
act now.
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