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A Successful Retirement Requires Planning, Commitment and Savings

If you've been kicking this can down the road, now is the time to start setting money aside for your later years.

Benjamin Franklin said, “If you fail to plan, you are planning to fail.” This advice holds true when it comes to your retirement savings.

In addition to having a plan, there are two other key elements to a successful retirement: commitment and money.

The U.S. Department of Labor’s Employee Benefits Security Administration offers insight to help people build financial security in their retirement. In fact, according to the administration only 50% of Americans have calculated the amount they will need to save for their retirement. It helps to look at your retirement as one of the most important and largest expenses you will have in your lifetime. And like any large expense, finding ways to set money aside for it is key.

One important factor of a successful retirement plan is to know how much money you will need yearly once you have retired. Experts estimate people will need 70% to 90% of their preretirement income to maintain their standard of living. The U.S. Department of Labor offers their Saving Matters Retirement Saving Education Campaign information for employees, small businesses, and employers to learn about saving for retirement and the tools needed to get started.

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In 2020, more than 25% of private industry workers with access to a defined contribution plan like a 401(k) did not contribute. These plans can significantly help build funds for your retirement. Experts across the board suggest that if you are offered a retirement savings plan, sign up and contribute the maximum amount you can. Other perks in addition to the savings can be lowering your taxes and your employer matching a percentage of what you save. Plans are different, so find out the specifics—such as how much you would need to contribute to get the full amount of your employer’s contribution.

In addition to 401(k) plans, your employer may also offer a pension plan. If so, ask for copies of your individual benefit statements so you are clear on what your benefit is worth. If you plan on changing jobs, inquire about what will happen with your pension benefit.

Every dollar you can save will help. Talk to your accountant about opening your own individual retirement account (IRA). You can add up to $6,000 a year into an IRA and even more you are 50 years of age and older. Two common types of IRA accounts are a traditional IRA and a Roth IRA. Before investing, find out which type of IRA would bring you the most benefit.

You can go to the Social Security website to use their retirement estimator to help estimate your benefits. Social Security retirement benefits replace about 40% of pre-retirement income. You can also call their toll-free number at 1-800-772-1213 for more detailed information.

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