It’s how people save to buy a home, to send the kids to college and retire in comfort. During your working years, take a portion of your paycheck and send it via direct deposit into a separate, special account at your credit union. If you don’t see it, you don’t miss it. As this money accumulates, move it to more long-term investments consistent with your risk profile and time horizon. With all these goals, retirement especially, time is your friend. Properly invested, money grows. Do you know your retirement shortfalls? Use this calculator
to help you determine if you have a retirement shortfall.
Shifting investment styles
When you’re just starting to save and invest for your retirement, you may be like many people: comfortable accepting greater volatility and risk for the possibility of greater gain. As you approach retirement, you may have far less tolerance for ups and downs. Investors tend to shift to more conservative decisions
, because losses just prior to retirement can be challenging -- and leave you little time to make it up with some unknown future gain. Prior to shifting your investment styles it's important to understand your current asset mix
When should you retire?
This can be a complicated decision, and it’s certainly a personal one. After a lifetime of work, are you financially and emotionally prepared for this new time of life? The fact is, you’re in control of the big decision, and you can be confident you’ll make the right one, especially if you’ve done your preparation and homework. Review your asset and liabilities to help you determine your net worth which could help you with your decision. You can also use this calculator
to help you determine whether you are saving enough to cover your expenses in retirement. Your credit union is also a great resource that can help you plan for retirement. Talk to a Financial Advisor
located at CEFCU, to ask your questions.
Making your money last.
The key to a comfortable and successful retirement is not
outliving the money you’ve saved by creating a budget
. Be careful with credit cards and new debt. Claim that senior citizen discount wherever it’s offered. Read the fine print about taxes on all your investments. And use your credit union for all it’s worth; they usually offer the best rates around for your money. You can also use the depletion calculator
to help you determine which distribution option is right for you.
Be strategic about Social Security.
Social Security is available to you at age 62, but it’s great if you can wait. Take it early, and you get 25% less than if you wait until full retirement age of 66 at which time you’re entitled to 100%. If you can wait until 70, you get 35% more. People often coordinate Social Security benefits with spouses who are also eligible. Maybe one of you takes benefits early, and the other waits. Visit ssa.gov
for more information about social security or use our social security calculator
to help you estimate your social security benefit.
Tapping your retirement plans.
You may have a defined benefit pension plan from a former employer. Your 401(k) and perhaps IRAs will also likely play a central role. It’s your choice when to withdraw
funds from these accounts. If you want to begin tapping them or simply want to roll them over somewhere else, make sure you understand all your options and the ramifications of every decision as well as the minimum distribution
amounts. Distributions from IRAs and 401(k) plans are required as you reach age 70½. A Financial Advisor
located at CEFCU can help you develop a plan that is unique to your own lifestyle.
College matters more than ever.
College costs continue to skyrocket, outpacing increases in income. Without careful planning, your children could find paying for higher education difficult. People with college degrees out earn their less educated peers significantly over a lifetime. They have an easier time getting work and withstand recessions and downsizing better. Start saving now by working with an Advisor
How much will it cost?
The cost of a college education varies wildly. Annual tuition and fees can run $8,000, and as high as $50,000.* Take either number (or one in between) and multiply it by four years, and it’s only the beginning. You may need to pay for separate housing, a car, gas, parking or maybe air travel a few times a year. Textbooks can also run over $1,000 a year. You can also find great information here
The earlier you start, the easier it is.
More parents are finding it difficult to fund their children’s college education. As a result, many students are taking on more debt – and having to repay college loans right after graduation. The answer? Start saving early. You can use this calculator
to set up a savings schedule to help you plan for college tuition. There are also special accounts specifically designed to help you save for college. The two most popular are the Coverdell Educational Savings Account (ESA) and the 529 College Savings Plan. They’re both tax-advantaged ways to grow your money. Start by working with a Financial Advisor
located at CEFCU today!
* The New York Times, June 30 2011, "What's the most expensive college? The Least? Education Dept. puts it all online."