Alas! Gone for most are the days you kept a job for life and received a generous pension indexed to cover rising healthcare costs (up + 16% versus general inflation in 2018). The good news is you have access to savvy, free advice from your Credit Union staff, and our Financial Education Center including its popular Retirement 101 module.
Also, check out these 7 recommendations for retirement planning, courtesy of Bankrate.com and your Credit Union, to help you take control of your financial future and secure a comfortable retirement.
- Pay down high-interest debt, especially the non-tax-deductible kind like auto loans and credit cards. Consider refinancing with lower rates, such as those offered by your Credit Union.
- Build an emergency cash reserve. Retirement can be tough if you need to take on new debt in a crisis. Six months’ expense is generally advised but put aside whatever is manageable.
- Have a budget. It helps you manage regular expenses and cut out fat. As part of this process, set up automatic bill payments, and transfers from checking to savings so you commit to putting away surplus income consistently into savings. Your Credit Union makes this easy.
- Create a financial plan. This is your road map to retirement. A typical target is 80% of current income. Subtract from this known retirement income like a pension fund, or Social Security and you are left with the extra you’ll need to come up with.
- Use tax-favored retirement accounts. Take advantage of pre-tax funds in an IRA for example, or a Roth that allows tax-free retirement income withdrawals. Fund these with high-interest savings tools like our industry-leading Credit Union Certificates. And make sure to max out employer contributions on your 401(k)!
- Save. Then save some more. Money grows best when it compounds over a long time. $50 a month in a 401(k) can still make a big difference if you start early enough. If you want to run some “what ifs” to see how much a little will grow over time, go to our “Growing your investment” calculator. The numbers might surprise you. And don’t forget to take advantage of your Credit Union’s industry-leading returns on Certificates!
Set goals and monitor them. Whatever annual growth your plan might predict, nothing is truly predictable, especially in the short-term. So check the performance of your investments at least annually to make necessary adjustments (save more, work more years or retire on less).