Experts say that fewer than half of Americans have even bothered to calculate how much money they’ll need to save for retirement. Some with access to a 401(k) have not participated.
These folks are in for a rude awakening when they reach retirement age and will likely be unable to stop working. Science is allowing us to live longer lives, so planning ahead to make the best of that time is more important than ever.
At Regency, we want all seniors to be able to enjoy living in a community like ours where their needs are met and they can enjoy many social opportunities.
To make that happen when the time inevitably comes, experts offer 5 tips to prepare:
Save Early and Often – The sooner you start, the smaller your monthly contributions can be, using the power of compound interest over time to build a sufficient nest egg. If you saved $5,500 a year for 25 years and your money earned 7% annually, you’d have $347,870. Compare that to the $125,000 you’d save by stashing cash in your mattress all that time. Saving the same amount for 35 years would generate $760,303! You can contribute even more if you are 50 or older, plus enjoy the tax advantages of an Individual Retirement Account (IRA).
Don’t Touch that Pile of Cash – The moment you dip into your retirement savings, you lose money and may have to pay withdrawal penalties. It’s better to do without, thinking long-term, than to buy something you want in the moment with that money.
Consult a Financial Planner – Hiring someone who understand basic investment principles can answer your questions and suggest your best options for reducing risk and improving return. Aim for building retirement savings that will last at least 30 years.
Look into Long-Term Care Insurance – This can protect retirees’ assets, but timing, again, is important. Start paying in too soon and you might pay more than you can ever get out of such a policy, but wait too late and starting a policy may be cost-prohibitive. The hard part is that it’s impossible to predict your chances of needing long-term care, or how long you may need it.
Diversify your investments to reduce risk – The financial planner can recommend how to spread your money among a range of investments to lower your risk of losing money while attempting to grow it. The younger you are, the more risk you can afford to take.
To learn more about Regency, call us at (205) 752-5500.