Budgetboost.co is supported by its readers. If you click on or buy something via a link on this page, we may earn a commission.

Your Options for Retirement Savings

I hit on the main ways of diagnosing your financial health in this past post.  I’m going to use Wednesdays to go further in depth on each point since I truly believe that financial health leads to less stress and happier lives.

I have already covered the first two points, Spend Less Than You Earn and starting an Emergency Fund.  The third point was to save enough for retirement.  This means saving consistently to fully fund the years after you stop working full time. We just signed up for yet another savings account at American Express bank, yes they do banking too, for this very reason.  Whether you choose to retire or simply age out, retirement savings is a truly important part of your fiscal life since you lose options with age.

Look at Your Options

You may be eligible for a 401k, 403b, IRA, Roth IRA, pension plan, etc.  We even plan on using our stock investments at Scottrade as retirement income down the road. Now we’re venturing more out into real estate investing using crowdfunding services hence why we wrote a Realty Mogul review recently talking about the pros and cons.

Out of all of these options, I’d first concentrate on the 401k to see if your employer matches any contributions.  If so, make sure to contribute as much as you need to in order to get the full employer contribution.  Otherwise, you are literally ignoring free money.  What other investment do you know of with a 50% – 100% rate of return? Even with the best stock trading app I have found it challenging to achieve 10% return.

In our case, I get matched 100% up to 6% in my 401k.  We definitely contribute the entire 6%.

As for our other retirement accounts, my husband is also eligible for a full pension, so we keep an eye on that.  We also contribute to a Roth IRA since we believe we’re in the lowest tax bracket of our lives right now (15%).  I want to be able to accumulate interest for the next 25 years and not have to pay anything to the IRS for it when we start taking withdrawals.  In fact, we’re looking into starting another Roth IRA this year.

No matter what way you are able to contribute, the important part is to take action and start saving.

Set Your Goals

Using articles and online calculators, like the Roth IRA calculator or the 401k calaculator you see in this post, you will be able to determine your overall retirement needs.  In general, most people believe you will need at least 80% of your pre-retirement income, but I think there are quite a few factors involved.

For example, we save about 40% of our joint income every month, which means we only live on 60%.  Should we still make sure to have at least 80% of our income throughout our retirement years?

Personally, I think we should plan on using as much as we use now.  We won’t have a house payment, but we will have increased medical costs.  I also plan for our future as if the pension and retirement accounts will be our only source of income.  Sure, we hope to continue working hobby jobs and to receive Social Security benefits, but I rather plan conservatively.

Our current goal is to have between $2-$3 million saved up along with my husband’s pension.

Automatically Save

Once you have chosen your retirement account(s), set up an automatic way of contributing.  In our case, my 401k and my husband’s pension plan contributions are automatically deducted from our paychecks before we even see our money.  We also have an automatic deduction set up monthly from our checking account into our Roth IRA.

Automated contributions take out the guess work and ensure you’ll have something saved regularly for your future.  Remember to continue this automated contribution plan for your whole working life…we are talking long-term.

Retirement savings is what’s going to keep you going through the later years of your life.  Please plan accordingly.

Are you currently saving for retirement?  Are you happy with your contribution amounts?  Does anyone else know anyone that actually seems to be following the plan below?

13 thoughts on “Your Options for Retirement Savings”

  1. Frugal Scholar

    Saving comes easily to me (I am VERY LUCKY in that), so, like you, much of my retirement savings is automated.

  2. Everyday Tips

    The best advice I ever got out of college was to start saving for retirement with your very first paycheck. That way you will never miss what you never had.

    Good post!

  3. MikeS

    My plan is to continue to increase my savings 1% every year. By the time my retirement date hits, I’m only living on about 60% of my salary. Couple that with no debt and I think I’ll be in good shape.

    My nest egg target is in the $3M (todays dollars) range. I don’t factor in SS, just to be conservative. I also have target balances each year from now until retirement so I can track my progress. This way I can make any adjustments needed before it’s too late.

  4. The Biz of Life

    I save the max in 401ks and IRAs. I’m not counting on Social Security at all. I figure by the time I retire, Congress will impose a means test and savers will be punished. That’s the way these geniuses think.

  5. I plan to keep working as long as I can. Actually I enjoy working rather than submitting myself to retirement lifestyle. To keep myself relevant and balanced, I plan to take mini-retirements throughout the years.

    My employer contributes 9% of my salary to my retirement account because it’s compulsory. At the moment, I don’t add extra money into it because the money will be frozen until I reach 65. My strategy is to invest my money in share market (local and international) and properties (local and international). We’re working to be millionaires before we reach retirement.

    To be honest, I don’t think much about retirement.

    Worse comes to worst, we could live in another country with lower living cost. There are so many options if you are open minded.

  6. BFS

    Bytta, loving what you do is awesome! My problem is that what I love to do (talking with friends and eating junk food) doesn’t pay enough. LOL.

    I’m not willing to live outside the USA again, but living in Houston forever will require us to think outside the box since costs will just keeping going up…

    The Biz of Life, I really hope I get social security but I just can bring myself to put it in the plan…I just have no faith in the government looking out for me.

  7. peter gerard scully

    Normally I don’t learn post on blogs, but I would like to say that this write-up very compelled me to check out and do so! Your writing style has been surprised me. Thanks, quite nice post.

  8. funny game zone

    Heya i’m for the primary time here. I found this board and I in finding It truly helpful & it helped me out a lot. I hope to provide something again and help others like you aided me.

Comments are closed.