- Start sooner rather than later. The sooner you start planning and evaluating if you are on track, the more options you give yourself to address shortfalls. The earlier you set money aside for retirement, the more time it has to grow and work for you. Don’t short-change your retirement by waiting until after you figure out how to pay for children’s college. Remember, there are no loans or scholarships for retirement. Retirement savings should be the priority.
- Calculate your expected expenses in retirement. Use current and projected expenses to estimate a yearly amount you will need in retirement. There are online forms and calculators you can use that adjust expenses for inflation. Most people need 80% – 100% of peak income to live comfortably in retirement. Even though some expenses decrease in retirement, other expenses increase, like healthcare and leisure.
- Set a written goal for retirement. Create a written plan including how much you will need in retirement based on today’s dollars. Check with your employer about what you can expect from any employer sponsored plans. Using online calculators, you can estimate the nest-egg you need to retire that will pay you the yearly income needed to meet your expenses. Then determine monthly savings needed to reach your goal.
- Participate fully in 401(k)s, 403(b)s, IRA’s. You don’t want to rely on Social Security, or employer sponsored pension plans, to be sufficient for a comfortable retirement. Use automatic payments or paycheck withdrawals to make saving easy.
- Find more money to save. Re-evaluate priorities and try to find a better balance between spending now and saving for later; reduce interest expenses and credit use; reduce spending on habits and hobbies; find extra income to direct to retirement savings.
- Track your progress. This can be done by using online financial calculators or working with a financial planning professional. Consider other options in addition to saving more; delaying retirement even by a few years can give you more time to save and reduce the amount of the retirement savings needed. Find calculators and forms at the MU Extension Women’s Financial Education Series.