Get your retirement plan on track
Building a healthy retirement savings now can open up the possibility of spending your time and money the way you want to in the future.
How you plan for retirement not only affects your future, but that of the ones you love, too. When it comes to financial planning, it’s preferable to save heavily at an early age, but not everyone can manage it.
Outline your retirement goals
When you imagine your retirement, how do you hope to live? Retirement planning is a process—it’s important to identify how much is being saved in comparison to how much will be needed in retirement. Outlining goals can help you assess the amount of income you’ll need to sustain your lifestyle.
While there are no hard and fast rules when it comes to retirement savings, financial experts say you should aim to replace 70 to 80 percent of your pre-retirement income, since some expenses related to work will disappear.2
While it may feel challenging to establish a budget that prioritizes retirement savings and still accommodates your current living expenses, a financial advisor can help you develop a plan that helps you understand your retirement needs and caters to the goals you’ve set for your future.
Consider maxing out your 401(k) or 403(b)
Are you making the most of your employee-sponsored retirement plan? Maximizing contributions lets you take advantage of compound interest while time is still on your side. If you haven’t set up an account, a 401(k) is a good starting point for savings since you might be eligible for a company match.
An employer-sponsored plan lets you contribute up to $18,000 per year, and if you’re over 50, you’re able to contribute an additional $6,000 per year.3 After maxing out your contributions, consider funding an individual retirement account (IRA). Contribution limits are $5,500 and those 50 and over can invest an additional $1,000 per year.3
Determine when to claim Social Security
As guaranteed income that can’t be outlived, Social Security can play a starring role in your retirement. There are many strategies to claiming this benefit, and the timing of when they start can result in a large difference in income.
You’re first eligible for Social Security at age 62, but you’ll receive a penalty for each month you take it before your full retirement age (somewhere between 66 and 67, depending on when you were born). And, for each month you wait beyond your full retirement age, you get a bonus.4
While it may be tempting to tap into Social Security funds early, consider delaying it. You can greatly increase the amount of your benefit by waiting until age 70 when the incentives for delaying stop rising.
Examine your debt
Making ends meet when income drops in retirement will be much more manageable if you are debt free. Even a mortgage, which helps you build equity, can drain limited resources. To start, target the highest-interest debts first, while paying just the minimum on others. After you’ve closed out one high-interest debt, consider the next highest. Once you’ve paid off your debts, the money that you typically used to pay off debts can now be used to boost retirement savings.
Saving for retirement early is always the best plan, but sometimes it's not always possible to set aside what you want to. With an effective plan, you can catch up on savings and prepare to spend retirement the way you want to with loved ones.
Explore your retirement income goal needs , and learn how Lincoln can help you achieve them.