April 19, 2016
Written by Kristin Gross, La Casa De Esperanza
How comfortable are you with retirement? If you are like most people, your answer is probably “not very.” According to a survey conducted by the Employee Benefit Research Institute, just 22 percent of workers are confident they will have enough money when they retire. If you are not part of the confident 22%, here are four tips to ensure a comfortable retirement.
1. Start saving and keep saving
If you are already saving, whether for retirement or another goal, keep going! Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Make saving for retirement a priority. Devise a plan, set goals, and stick to it.
2. Contribute to your employer’s retirement savings plan
There are many advantages to contributing to a 401k or 403b account other than just an employer match. Your contributions decrease your taxable income and therefore your annual tax bill. You may even be eligible for a retirement contribution tax credit. In addition, lower fees are generally associated with an employer sponsored plan and automatic deductions make it easy.
3. Know your retirement needs
Retirement is expensive. Experts estimate you will need at least 70 percent of your preretirement income – lower earners, 90 percent or more – to maintain your standard of living when you stop working. Take charge of your financial future. The key to a secure retirement is to plan ahead.
4. Don’t touch your retirement savings
The cost of a 401K loan is much higher than just the principal and interest on the loan. You also need to take into account the loss of growth over the long term. This means that a small loan of a couple of thousand dollars turns into a ten or twenty thousand dollar loan over the long term.
Kristin Gross is an Asset Building Coach for the Financial Stability Initiative at La Casa de Esperanza, in Waukesha, Wisconsin. The Financial Stability Initiative is a partnership between La Casa de Esperanza and the United Way of Greater Milwaukee & Waukesha County. Kristin has her Bachelor’s degree in Personal Finance from the University of Wisconsin – Madison. She is a financial coach and educator working with individuals and families on obtaining tools for financial capability by meeting basic needs, building savings and gaining assets. She enjoys sharing her knowledge of personal finances to positively impact the lives of others.