Saving for Retirement
Retirement may seem far away. So is it too early to start thinking about it now? No! Starting to save for retirement can allow you to take advantage of the potential of compounding—the “eighth wonder of the world.”
By putting away what you can now, you could have exponentially increased your savings by the time you retire and potentially lower your effective tax rate every year leading up to retirement.
With all the different retirement account types, getting overwhelmed is entirely normal. Where you work depends on your options, but sorting through them doesn’t have to be complicated. Each account has the same purpose: to support your retirement and long-term goals.
When it comes to saving for retirement, is there a number? Well, there’s no magic number, unfortunately. But creating a retirement spending plan can help you develop a proper monthly savings goal that makes sense for you.
It’s normal for market conditions to cycle and change. For example, on average, stock market cycles have anticipated economic cycles by 6–12 months. As a result, investors who can continue contributing to their retirement have the potential to take advantage of different market conditions, known as dollar cost averaging, buying less when the market is high and buying more when the market is down.
If you are 50 or older, take advantage of an opportunity to catch up. You can make catch-up contributions to help increase your savings as you near the retirement finish line.
Healthcare expenses in retirement are likely to be a significant item in your budget. In addition to planning for everyday healthcare costs, consider whether you could benefit from a long-term care insurance policy to protect your assets, estate, and legacy. Research shows that 70% of people over age 65 will need some form of long-term care.
Understanding the rules for withdrawing your retirement accounts is critical to a smooth retirement. While some are mandatory, taking your savings out early can create significant tax implications. When it’s time to start spending what you’ve set aside, we explore options for withdrawals in the most tax-efficient manner.
Supplementing your retirement savings with the stability of an optimized Social Security income strategy is vital. Social Security, managed by the U.S. federal government, pays benefits to retirees. So deciding when to receive your Social Security is crucial. The longer you wait, the more income you can receive; the earlier you take it, the less payment you receive monthly. Our Social Security Benefit Optimizer can help you manage the complexities such as longevity and break even points.