Saving for the Lifestyle You Want in Retirement

Elderly couple viewing retirement options

Do you dream of traveling to exotic lands in your golden years? Perhaps you want to have a large garden or to learn new hobbies. Or do you think that will be the reality for only a few and you will be working your whole life, even in retirement? If you start putting some money away for retirement now, no matter what your age, you can substantially improve your chances of enjoying your golden years.

Years ago, people worked 20, 30 or 40 years for a company and that company provided them a pension plan in retirement. Those days are long gone. Now most people do not receive a company pension when they retire. Not only have many companies eliminated their pension plans, it is now unusual for a person to even work 20 years or more for the same company. Social Security was never meant to be your total source of income when you retire. The responsibility to plan and save for retirement falls to each of us.

It doesn’t matter what your age, now is the time to contribute to your 401k or retirement account. Do not delay. No more excuses. If your employer offers a 401k with a match, contribute at least as much as you need to, to get the match.

There are benefits to contributing to your 401k or retirement account. Your contributions will be pre-tax. In other words, you are not taxed on the part of your income that you contribute. You also do not pay income taxes up-front on any money your company matches in a 401k account. You do, however pay taxes on this money when you retire and withdraw the funds. Contributions to a Roth IRA are not pre-tax.

Contributing 3% to get a 3% match, if offered by your employer, is smart move. You immediately double your money. If you can contribute more, then do so. If you can contribute 4%, 6% or 8%, or more do so. The sooner you start saving, the faster your savings will build.

Don’t let choosing the right funds to invest in intimidate you or keep you from investing. Meet with the advisor to your company’s plan and develop an investment plan. In addition, there are several funds that are diversified based on the year you will retire, taking into account diversification and risk. It doesn’t get much easier than that.

Take the time to review the Retirement Planning Calculator on this website. You can change any of the numbers (income, savings, years to retirement, etc.). By changing the numbers, you can see the results that saving for retirement will bring you.

Download Retirement Planning Calculator (Excel xlsx)

Before you turn 62 or your full retirement age, which ranges from 66 to 67, you need a plan. It isn’t your age that determines when you can retire, it is your financial situation and your health. Start saving now so you can have the lifestyle you want when you reach your golden years.