Retirement is something that falls into the “someday” category for many. But “saving for retirement” is a leading source of financial stress for people of any age.
While studies show that 71 percent of Americans are adequately prepared for retirement, much of that includes receiving Social Security benefits under the current law. With Social Security payouts only scheduled to be paid at the full benefit amount through 2035, Millennials and Gen Z might want to consider approaching retirement from a different perspective — one that is diverse and doesn’t rely as heavily on government benefits.
Regardless of your age, here are a few steps you can take to jumpstart your retirement journey:
- Define what retirement will look like for you: Visualize how your retirement will look and feel. Ask yourself, “Where will I be living?” and “What lifestyle do I want?”
- Calculate how much you’ll need to save: Determine what your annual income and savings should be to achieve the retirement you envision. To start, you’ll need an estimate of what age your goal is to retire at and how much you expect your income to be until that point. There’s no savings benchmarks you have to reach at a certain age, but it is recommended to have about 5 times your annual salary saved by age 50. This may seem like an overwhelming goal, so make sure you are making solid contributions.
- Find a plan that’s best for you: Do your homework and research what type of accounts to deposit your retirement savings into. If your employer offers a 401(k), 403(b), or SEP-IRA and matches your contribution to a certain percentage, take advantage of it. Individual Retirement Arrangements (IRAs) are an option you can open anytime through a financial institution. There’s several different types, so find which is better for you.
- Make your contributions automatically: Set it and (kind of) forget it! Stay on track towards your goal by setting up automatic payments and contributions to your retirement plans through your employer or banking institution. Remember to increase your contribution with pay raises, too. If you’re starting your retirement savings journey early, you have time on your side. If you’re close to retirement age, be a bit more aggressive in order to achieve your goal.
Saving for retirement is a long-term commitment and the biggest step you can take right now is to get started and be consistent. Penn Community Bank offers tools and resources to help you save for retirement – learn more. Today’s work will pay off in the future!
This blog is part of Penn Community Bank’s celebration of America Saves Week – an annual celebration and call to action for everyday Americans to commit to saving successfully. Together with thousands of participating financial institutions and community organizations, we encourage local communities to do a wellness check on their finances and make a plan to achieve better financial stability.