Retirement Education & How to Save Money for the Future

If you’re concerned about your retirement savings, you’re not alone. In fact, only a fraction (about 14%) of workers in America say they’re “very confident” about their ability to live comfortably once they retire.

How to Plan for Retirement

So how much money do you need, and how do you keep it safe? A lot of factors impact your own financial requirements, such as health, marital and family issues, housing expenses, and more. But most commonly, Americans say they expect to need one million dollars in retirement money to live comfortably. Are you on track to saving that amount? And then, what can you do to ensure nothing happens to your “nest egg”?

 

If you have a retirement account with your current employer, you’re probably somewhat limited on your investment choices. This is where Quest Education can help. We can show you a reasonable, attainable path to maximize your retirement savings options and help you get closer to your retirement goal. We can also help you form a plan to protect your assets, so they won’t be subject to creditors or other circumstances that could put them in danger.

 

Do you have the right retirement planning strategy? Is your money safe? Here are some things to consider.

Look at the Long Term, But Start Now

The good news about that is that even if you’re planning on retiring in the next 10 years, you still have time to build your savings. The only way it can become too late to save is if you never start. The most important thing about retirement planning is to stop putting it off. Here are some popular options for long-term savings:

 

  • FDIC-Insured IRA (individual retirement account)
    These savings accounts are tax efficient. For example, traditional IRA’s allow you to make annual tax-deductible contributions. In the case of a Roth IRA, what you save actually grows tax-free.
     

  • Stocks or Mutual Funds
    Speak to a broker-dealer about your options that may lie outside of your work-sponsored 401k. While these securities aren’t FDIC-insured and are subject to investment risks, aggressive planning can have its payoffs in bigger, faster wealth building.
     

  • Independent Savings
    Of course, your own bank account is an option for stowing money away for retirement. If you’re young and have time on your side, your own savings plan is a great complement to any other retirement options you choose. And of course, a savings account doesn’t come with the risks inherent in stock market investing.

 

A lot of people choose to go with some combination of the methods above. And remember, you’re looking over decades here. If your 401k takes a dive, don’t panic. You’re looking for an overall gain over the long haul, not month after month.

Utilize Employer-Sponsored Plans

Most employers offer a 401k with some kind of match. You can contribute to it pre-tax, which is a definite advantage. For example, if you’re in a tax bracket of 20% and put $100 per paycheck into your 401k, your contribution being pre-tax means your $100 contribution only drops your take-home pay by $80, rather than the full $100. This may help you invest more without feeling such a pinch in your budget. And if your workplace offers a 401k match, definitely take advantage of it. Many employers will match up to half of your contributions, up to a certain percentage of your salary (usually 3 to 5%). This free money really adds up over time.

Catch Up Planning

It’s no secret that there are government limits on how much you can contribute to your 401k or IRA. If you’re 50 or older, however, you can actually contribute more than those limits. So if you’re getting a late start or haven’t been able to save as much as you’d like, you can try to catch up. On an IRA, you can contribute an extra $1,000 per year ($6,500 rather than $5,500). If you have a 401k, you can add $24,500 over the year instead of $18,500.

Wait a Little Longer

If you’re in good health and don’t mind working a little longer, you can delay taking Social Security payments and allow your benefits to rise. The earliest you can begin receiving Social Security is age 62. But for every year you delay those payments until age 70, your monthly benefit will go up. For example, at age 65, someone eligible for $22,400 per year in Social Security payments would be eligible for $31,680 per year at age 70.

Save it, But Secure it

Most Americans make at least some effort to save for their retirement, and most of us would say we’re concerned about the security of that money and other valuable assets. However, there’s a vastly underutilized tool that can help ensure that your retirement planning efforts aren’t in vain.

 

You’ve probably heard the adage, “hope for the best but plan for the worst.” This is good advice in a lot of areas, including retirement planning. All kinds of unexpected circumstances can pose a threat to the money you’ve saved and assets you’ve acquired. These might include lawsuits, illness, death, blatant theft and more. But if you’re prepared with asset protection strategies, you can avoid suffering big losses that could jeopardize your retirement.

 

Asset protection helps you build a fortress of sorts around your assets, well ahead of any disaster that could put them at risk. In the case of a financial disaster, having these measures in place ahead of time will be critical to ensuring you can maintain the resources needed to enjoy your retirement.

 

There are several different methods of asset protection available, depending on your needs. As part of your retirement planning or estate planning process, consider putting some of these methods into place. Speak to an asset protection specialist or attorney to see which of these might be the best fit for you.

 

  • Irrevocable or testamentary trusts

  • Asset transfers to an LLC (limited liability company)

  • Homestead property acquisition

  • Life insurance policies

  • Liability insurance

  • Charitable giving

  • Gifting of assets to family members

 

The most important facet of asset protection is the timing. Like retirement planning, asset protection should never be procrastinated. Once financial trouble hits, it will be too late to put asset protection measures in place. Protecting your assets now offers the peace of mind of knowing your wealth is secure both for your retirement and for your next generation.

 

Improve your financial education and secure your future. Quest Education can help you learn more about retirement planning. Let us help you decide how to save money, and then how you can protect those assets to guard against disaster.

  • The average allowance an American child now receives is about $780 per year, or $65 per month, according to a recent study by the American Institute of CPAs. 

 

  • Only 14 percent of American workers say that they are "very confident" that they will have enough money to live comfortably in retirement

 

  • 30 percent of workers said they have less than $1,000 in savings and investments. 

  • Americans are living longer than they used to. It's estimated that America is home to about 72,000 centenarians (people aged 100 or older).

  • Some retirees will need their nest eggs to last a whopping 38 years, which is longer than many people work over the course of their lifetimes. If you live to 100 and retire at age 62, for example, you're looking at 38 years of retirement.

  • You might end up retiring earlier than you planned to. According to the 2016 Retirement Confidence Survey, 46% of retirees left the workforce earlier than planned, with 55% citing health problems or a disability as the reason and 24% citing changes at work such as a downsizing or workplace closure.

  • Healthcare can cost much more than you think it will. A 65-year-old couple retiring today will spend, on average, a total of $275,000 out of pocket on healthcare.

Did you know?:

Smart financial planning - such as budgeting, saving for emergencies, and preparing for retirement - can help households enjoy better lives while weathering financial shocks. Financial education can play a key role in getting to these outcomes.

 

-Ben Bernanke, Former Chairman of the Federal Reserve

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