Is retirement among your highest priorities?
Have you taken adequate steps to prepare for it?
One of the biggest concerns facing Americans today is retirement.
Many company-sponsored, company-paid pension plans, long the staple of many Americans' retirement incomes, are being replaced by qualified retirement plans funded by employee contributions.
According to current assumptions made by the Social Security Board of Trustees, beginning in 2017, annual benefits paid to retirees will exceed payroll tax revenues. By 2041 they predict the Social Security Trust Fund will have been fully spent, resulting in ongoing reductions in benefits for future retirees.
For many, the answer will be self-funded retirement plans such as:
- Employer-sponsored 401(k) and 403)b) plans
- Annuities - fixed and variable
- Life Insurance cash values
Most of us list financial security at retirement among our highest priorities, yet only a few of us take adequate steps to prepare for it.
The typical 45-year old married couple in the United States will have only a portion of what they'll need at retirement to maintain their existing lifestyle.
Where will the balance of what you need to live on come from? If the funds aren't there, what will you have to give up?
Assuming Social Security is still solvent when you retire, it may only pay a small percentage - no more than one-third - of your pre-retirement income.
Are you counting on Social Security to help you afford retirement?
- Could you maintain your current lifestyle at this level of income?
- Where will the balance of what you need to live on come from?
- If funds aren't there, what will you have to give up?
With proper planning, you can accumulate assets to supplement your retirement income, and potentially stretch those funds out over your expected lifetime.
Plan for your retirement:
- You may want to consider opening an IRA. Then, defer as much as you can into it. Are you self-employed? Look into a Simplified Employee Pension (SEP) plan or installing a 401(k) plan.
- Exercise restraint. Once you've put money away, leave it alone. The U.S. government imposes strict penalties on money you take out of tax-favored retirement plans, in addition to making you pay income tax on it.
Learn all you can. With a 401(k) and other self-funded plans, you determine how your money is invested. By applying some basic investment strategies, you'll have a better shot at achieving your retirement goals and objectives.
Chose the right tools now to prepare for the comfortable retirement you expect and deserve.