Planning for Retirement

This October, as we celebrate National Financial Planning Month, we are encouraging consumers like you to start setting retirement goals and develop a financial plan for your future. Retirement plans are essential and provide the road map we all need to a more comfortable and secure life as we age.

A retirement plan doesn’t depend on a savings account alone—it requires a strong investment strategy, budget forecasting, understanding your healthcare needs and costs as you age, life and long-term care insurance, estate planning, and more.

Consider this:

• Financial professionals suggest you will need 70-80 percent of pre-retirement income to maintain your lifestyle in retirement.
• Your Social Security retirement benefit covers only about 40 percent of your pre-retirement income.
• Life expectancy in the United States rose 10 years between 1960-2017 while Social Security retirement age increased a little bit, but not nearly as much.

With the increased life expectancy comes higher medical expenses and possible long-term care. The money you save during your working years will now have to stretch over a longer period time and afford your financial stability in retirement.

Retirement planning allows you to take advantage of various savings and investment options to build a retirement nest egg. This may include contributing to employer sponsored retirement plans such as 401(k)s or opening individual retirement accounts (IRAs). By utilizing these tax advantaged retirement accounts, you can start preparing for your retirement early and also benefit from compound interest and potentially grow your retirement savings significantly over time.

Other financial decisions to consider for financial independence and stability in retirement:

• Create your retirement budget.
• Pay off your mortgage and other debts before entering retirement to help increase the flexibility of your cashflow.
• Claim your Social Security benefits at the full retirement age for a higher amount.
• Hire a financial planner to manage your portfolio income and income taxes.

Learn more about how to manage your finance as you get older and federal programs and resources on this topic by watching Aging with a Plan: Managing Your Money and Retirement Goals.  Ask your credit union about financial literacy resources on retirement planning and other personal finance topics.