As the cost of living continues to rise, many employees worry about how much is needed to be financially secure during retirement. Many factors affect how much a person needs to save, including lifestyle and location. Experts claim that the average American couple needs around $315,000 for healthcare expenses alone and around $1 million total in order to retire comfortably.
While that amount of money seems unrealistic, Anthony Bunnell, head of retirement at a workplace financial solutions company, claims that with proper foresight, direction, and disciple, it is possible.
Step one – explore your employer-offered retirement plan
As an employee, it is important to inquire whether your employer offers any sort of retirement plan, such as a 401(k) or 403(b) if your employer is a non-profit or educational institution. If your employer does offer a 401(k) or 403(b), you should determine whether there is an employer match. If so, the company matches up to a specified percentage when the employee contributes to their account.
Step two – research beyond your employer
Not every workplace offers a retirement plan or a plan that fits your needs; however, there are options, like an IRA account, that are offered to individuals. There are a couple of types of IRAs, so be sure to research each to determine if they meet your needs.
Step three – utilize a health savings account (HSA)
You are eligible for an HSA if you are enrolled in a high-deductible healthcare plan. You can contribute up to a limit, and the funds roll over from year to year. Individuals can use this account to grow savings tax-free and make tax-free withdrawals for qualified medical expenses. An account user can reduce their taxable income by their contribution amount, as the contributions are tax-deductible.
Step four – capitalize on perks
Some employers encourage and incentivize their employees to participate in retirement accounts. Be sure to capitalize on these perks if they are available.
Step five – start today
You can never start saving for your future too far in advance. The earlier you begin to save in your career, the better off you will be as you approach retirement. Experts advise setting aside 10-20% of each paycheck to build up your future savings.
If you have any questions regarding what retirement benefits your employer offers and your eligibility, contact the Creative Benefits ESR team.