Planning for retirement can seem daunting, but with a little foresight and regular savings you can reach your goals. Don’t feel bad if you haven’t already started, it’s never too late. What’s important is that you begin the process as soon as possible.
Here are four simple tips from Community Bank of Oak Park River Forest to help you plan for your retirement:
1. Determine How Much Money You Need For Retirement
First, you need to figure out how much money is needed for your retirement. You will need to take several factors into consideration including your current and potential income, age, retirement lifestyle, and possible social security income. This may sound difficult, but the good news is that there are online calculators which can help you in the process. Visit AARP and Bankrate, which can help paint a clearer picture of how you can reach your retirement goals. You may be surprised by some of the numbers you see and believe your goals are unattainable, but don’t worry. You can begin the process a little at a time. The point is to begin thinking about these questions, as you may have not have considered them before.
2. Live Below Your Means
Once you begin facing the question of how much money you will need for retirement, think of ways to cut down on your cost of living. While it is true that cost-cutting is difficult, especially given the many expectations placed on you and your family, “keeping up with the Joneses” isn’t a good financial strategy. Sure, the family next door may have a shiny new car, but chances are they’ve also maxed out their credit cards. Think of a few small measures you can take such as using coupons when you grocery shop, eliminating your cable bill, or brewing a cup of coffee at home instead of stopping at Starbucks on the way to work. Just a few small measures here and there really add up to big savings.
3. Open and Fund Retirement Accounts
If you are lucky enough to have an employer sponsored retirement program such as a 401(k) with matching funds, you’re ahead of the game. Contribute the maximum amount in order to receive the full benefits of your employer’s matching program. The sooner you begin, the more you’ll accumulate before retirement. Think of it as a snowball effect, a little savings now is worth a lot more in the future. If you do not have an employer sponsored retirement savings plan, there are other options available. One option is an IRA, which allows you to put away savings at your own pace. There are two types; traditional IRAs and Roth IRAs. Benefits of traditional IRAs include tax deferred earnings, and traditional IRA contributions may be tax deductible. Roth IRAs on the other hand are not taxed during distribution and there are no age restrictions for distribution. Another benefit of both the traditional and Roth IRA is that you can “roll over” money from a qualified retirement plan such as a 401(k). This is beneficial if you switch jobs or are nearing retirement. If you want to learn more about IRAs, we invite you to stop by Community Bank and speak with one of our personal bankers.
4. Insurance is Key
When planning for retirement, there are other considerations in addition to saving money.
For instance, consider learning more about disability insurance and life insurance, which will protect your family against unforeseen circumstances. Also, long-term care insurance is another consideration which can help cover a stay in a nursing home, and will allow you to avoid tapping into your precious retirement savings to pay for expensive special care.
Beginning the planning process now will help you better prepare for the future. The sooner you begin, the more you’ll accumulate before retirement. If you would like to learn more about IRAs and planning for your retirement, call Community Bank at 708.660.1000, or visit us online at www.cboprf.com.