From Social Security benefits and pension plans to health care and taxes, retirement planning can seem daunting and complex. As a financial representative with Modern Woodmen of America, a fraternal financial services organization, I can help you simplify the process, clarify key questions and gain confidence in your retirement preparations.
Here, I’ll break down some of the complexities of Castro Valley residents’ frequently asked questions. With a little education and proactive planning, retirement can be an exciting new chapter filled with possibilities.
When should I start planning for retirement?
It’s never too early to start! Ideally, you’d start saving in your 20s or 30s. But if you’re older and haven’t, there’s still time! I can help you maximize savings in your remaining working years.
For young people, retirement may seem a long time off. But planning early allows your savings more time to grow through the power of compound interest (earning interest on your interest). Every year you delay saving, you could be missing out on potential growth.
That said, if you haven’t started saving for retirement, the key is to start planning now and take steps to secure your future finances.
How much savings do I need to retire comfortably?
This is one of the most common questions I hear, and there’s no one-size-fits-all answer. How much money you’ll need depends on your desired lifestyle in retirement, health care costs, your intentions to work part-time, and when you’ll start collecting Social Security, among other factors.
Retirement planning experts often suggest saving 70-90% of your pre-retirement income for annual retirement expenses. For example, if you earn 00,000 annually now, you may need $70,000-$90,000 annually in retirement to maintain your standard of living.
How should I start planning?
First, list your expected monthly expenses upon retirement. Don’t forget health care (ranging $300-
,000 or more monthly for Medicare premiums), copays and dental, hearing and vision care. Next, identify your income sources, such as Social Security, part-time employment, and retirement savings withdrawals.
Using these numbers, a financial representative can help you come up with a detailed plan and determine how much you’ll need to save. We can also recommend adjustments – like working longer or downsizing your home – to minimize the risk you’ll outlive your savings.
What retirement savings options are available?
A 401(k) plan is a savings option available in many workplaces, but it’s not your only option. Your Modern Woodmen financial representative can explain alternatives and help select appropriate options aligned to your risk tolerance, time horizon and financial goals.
- Traditional and Roth IRAs allow your money to grow with tax benefits either now or when you withdraw funds from your account.
- Annuities can also help you accumulate retirement savings to last your lifetime. Options are available with flexible premiums, tax-deferred growth and low or no risk of market volatility.
- Health savings accounts let you set aside pre-tax funds that carry over year after year.
- Stocks, mutual funds and other investments can also help accumulate funds based on your goals and preferences.
