October is National Retirement Security Month — a national effort to raise public awareness about the importance of saving for retirement.
And this month provides the perfect opportunity for employees to revisit their personal retirement goals and determine if they are on track for a secure future.
According to a recent report on Americans’ view of retirement, “more than half of are concerned that the COVID-19 pandemic has impacted their ability to achieve a secure retirement.”
Hilltop Wealth Advisor Bill Davis recently spoke with WSBT-TV’s HomeTown Living on why taking the time to consider plans for the future should be a must for everyone.
This is the magic question. It’s a personal question that starts with understanding what your day-to-day expenses will be.
Remember, you will spend less on some things and more on others. One of the first steps in planning for retirement is getting a handle on your day-to-day expenses.
Make a note of fixed expenses like rent or mortgage, groceries, utilities, insurance, and taxes. And discretionary expenses like spending on gifts, clothing, entertainment, and travel.
Realistically, you should factor in higher medical expenses because we are more vulnerable to developing chronic and serious medical problems as we age.
Unexpected out-of-pocket medical expenses can devastate your savings and create debt. Take some time to understand the cost of purchasing extra medical coverage and factor that into a financially secure retirement budget.
My rule of thumb is — aim to save at least 15 percent of your pre-tax income each year, including any employer match.
Together with other steps, that should help ensure you have enough income to maintain your current lifestyle in retirement.
So why 15% percent? Most people will need somewhere between 55% percent and 80% percent of their pre-retirement income to maintain their lifestyle in retirement.
But not all of that money will need to come from your savings. Some will likely come from Social Security. We did the math and found that most people will need to generate about 45% of their retirement income (before taxes) from savings.
Yes, and that is where Independent Registered Investment Advisors come in.
Most workers are responsible for their retirement savings these days, and high schools don’t have required classes on 401(k)s and IRAs.
The Hilltop team is here with what you need to know about saving for life after you stop working — and getting on the path toward a comfortable retirement — no matter your career or the size of your paycheck.
Remember, your retirement savings shouldn’t be a mystery. You need to understand how your money is invested — to know if it’s working to your best advantage.
There’s also a wide range of choices when it comes to investing your money.
That’s why talking to a financial professional — about your entire financial life — especially as you approach retirement, is a good idea.
Make sure to speak to an Independent Registered Investment Advisor — someone who has pledged to act as a fiduciary. Which means they’re both legally and ethically bound to work in your best interest.
The sooner your start saving, the calmer you’ll probably be about the money you do save — and the more committed you’ll be about putting aside enough to meet all your lifelong goals.
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