When is your expected retirement date? Whether you’ll be retiring in just a few years, or you still have a decade or more to go, one thing is certain: Retirement is one life situation for which we all need to plan.
So how do you know whether your plans are on the right track? That’s a complicated question, and professional guidance is necessary to help you sort through the details. But these seven signs should give you a few clues on where your retirement savings plan stands.
You’re living within your means. Experts often say that you should be living on 85 percent of your income, and saving the other 15 percent for retirement. Of course, that’s just a ballpark figure, and you might need to save a bit more depending on your needs and lifestyle goals.
You have set a retirement savings goal. You wouldn’t go on a long road trip without first choosing a destination, so why would you save for retirement without setting a savings goal? Everyone needs to estimate their future living expenses and set a target for their savings.
You know how much you’re saving each pay period. You should be able to state a number, right off the top of your head.
You avoid credit card debt. You’re smart about credit. You use a credit card occasionally, but you aren’t wasting piles of money on interest by carrying large balances.
You don’t borrow from yourself. You know that borrowing money from your retirement account will not just cost you money; it will cost you time that you can’t get back. You have a savings account, line of credit, or some other means of covering emergency expenses so that you never have to dip into your 401(k).
You understand the purpose of Social Security. You know that Social Security was designed as supplemental retirement income, and will not cover all of your living expenses in retirement. This knowledge has led you to make plans for a stream of income that will sustain you.
You take advantage of savings perks. You contribute enough to your retirement account, to take advantage of matching funds from your employer each year. You also know that contributions to a qualified retirement account help you earn a major tax deduction, and you utilize that deduction to its full potential each year.
Do all of these signs apply to you, or do you need help on a few points? Saying “yes” to each item on this list is no guarantee that you’ll retire comfortably, but they are definitely signs of a smart saver. Contact us to learn more about retirement savings, especially if a few of these items are tripping you up.Read More