Retirement Confidence Requires Careful Planning
By John Newman and Rick Zollo, Met Life // March 27, 2013
Resources Available To Provide Solutions
BREVARD COUNTY • MELBOURNE, FLORIDA – In a recent retirement confidence survey, it was found that retirement confidence levels among working Americans is at a record low and many question their ability to afford a comfortable retirement.
This low confidence level is justified as the survey also found that more than half of workers’ total value of household and investments, excluding their homes or any defined benefit plans, is less than $25,000 and for nearly 30 percent it’s less than $1,000.
If you’re like many of the workers polled for the survey, you’re concerned about your future financial security but aren’t sure where to start, how to get on track or even what the right track is.
There are actions you can take to be ready for retirement.
Here are some ways you can increase your retirement confidence:
• Educate yourself. You need to know where to invest your savings and how different savings vehicles work. Carefully research what’s available to you, such as your employer’s retirement savings plan, types of investments and potential tax advantages that may help you to save even more. If your employer offers on-site and/or online financial workshops, be sure to attend. Take advantage of educational resources from the federal government such as the Financial Literacy and Education Commission at www.mymoney.gov, or visit the Internal Revenue Service website at www.irs.gov/retirement/participant.
• Understand Social Security. For an average worker, Social Security only replaces about 40% of income. Knowing just how much income you’ll need in retirement and what portion will come from Social Security will help you to estimate how much income your retirement savings may need to generate in retirement. Your Social Security Statement is an, easy-to-read personal record of the earnings on which you have paid Social Security taxes during your working years and a summary of the estimated benefits you and your family may receive as a result of those earnings. This statement is a valuable tool that can give you a good idea of where to start with your retirement planning.
• Take advantage of your employer’s retirement savings plan. If your employer offers a retirement savings plan, such as a 403(b) or 401(k), it provides you with features that can help you save for retirement. Pre-tax contributions mean you may lower your gross taxable income (pay less in taxes), tax deferral (no taxes due until you with draw the money) and the power of compounding (potential earnings or interest automatically reinvested in your retirement account).
• Diversify your investments. To manage risk to help achieve retirement savings goals, diversify your portfolio. Each type of funding option has strengths and weaknesses. By spreading your money among various types of investments and asset classes, you take advantage of their respective strengths without exposing all of your money to any one investment’s weaknesses.
• Prioritize and save. Many of us have competing priorities when it comes to our financial goals. Perhaps a competing priority is the care of a loved one with special needs or aging parent, saving for a child’s college education or credit card debt. Take a detailed look at where you’re spending your money and determine where you can put more money toward savings. For example, it may make sense to bring your lunch to work, as opposed to buying it in the cafeteria, or renting a movie instead of going to the theater.
American workers are becoming more and more responsible for their financial security in retirement. Understanding how and where to save, along with how much, can help you become confident that you’ll have enough savings to enjoy a comfortable retirement.
And while it’s up to, you’re not alone.
Be sure to engage the resources that are available to you, including your employer’s retirement savings plan and the experienced guidance of a financial professional. By doing so, you have the opportunity to achieve retirement confidence.
John Newman and Rick Zollo are Financial Services Representatives for Met Life at 6767 N Wickham Road Suite 4-105 in Melbourne.
For more information, call them at 321-610-9918.