There’s no doubt that you’ll retire someday. When you do, you obviously will need sufficient income on which to live. But where will this money come from? The answer to that would be Save For Retirement Week, which is also known as National Retirement Security Week.
Unanimously established by the U.S. Senate in 2006, this annual week in October seeks to raise awareness of the importance of retirement planning and encourage people to begin saving for their retirement as early as possible. This year, Save For Retirement Week occurs during Oct. 17-23.
While 80% of Americans think that it’s important to save for retirement, only about 56% of us actually do so. Additional sobering statistics include the following:
- 66% of Americans worry that they won’t have enough saved by the time they retire to live comfortably.
- 33% of Americans have less than $5,000 in current savings.
- Experts predict that 50% of Americans won’t be able to maintain their standard of living once they retire.
- Only 28% of Americans take full advantage of their employer-sponsored retirement plan.
- Of those with an employer-sponsored retirement plan, at least 33% of them say that they have little or no understanding of how it works.
- 20% of Americans have no employer-sponsored retirement plan at all.
- 42% of Americans who save for retirement began doing so in their 20s; 32% in their 30s; and 13% in their 40s.
Unfortunately, even in the top 10 retirement savings states, only the following percentages of residents save at least 10% of their pay:
- Tennessee – 26%
- Florida – 21%
- Kansas, Ohio and Wisconsin – 20%
- Pennsylvania and Texas – 19%
- Illinois – 16%
- Utah – 15%
Individual Retirement Accounts
Rather than crossing your fingers and hoping that Social Security will cover all of your needs after you retire, your better course of action is to take charge of your own retirement planning. For instance, you may wish to set up an Individual Retirement Account (IRA) and then regularly contribute to it. Keep in mind that you can have an IRA whether or not you have a 401(k) or another retirement plan at work.
IRAs are tax-advantaged investment accounts available in the following four types:
Depending on which type you choose, your contributions to it could be tax deductible. On the other hand, if you withdraw any of your accumulated savings prior to age 59 and a half, you would have to pay a 10% penalty as well as claim your withdrawal as ordinary income. In any event, the money you invest in an IRA grows tax-free.
If you have an old 401(k) from an employer for which you no longer work, you can roll the money into an IRA, called a rollover IRA, and keep its tax-deferred status.
How Will You Celebrate Save For Retirement Week?
The most important thing to remember about retirement saving is to begin doing it as early as possible. Even if you’re young and retirement seems like an eternity away, it will arrive sooner than you realize. Save For Retirement Week is the perfect time to not only obtain more information about your employer’s retirement plan, assuming it has one, but also to open an Individual Retirement Account of your own.
Before you do so, it would be wise to contact AmeriEstate Legal Plan. Why? Because we can help you determine your future financial needs and advise you of which strategies will best help you achieve your retirement and estate planning goals.