Accord­ing to most retire­ment sav­ings sta­tis­tics, sav­ing for retire­ment is some­thing a lot of peo­ple put on the back­burn­er.  Until it is too late, that is.

For some peo­ple, the rea­son is that they are sim­ply liv­ing pay­check to pay­check, so there isn’t much left to put aside. Oth­ers have some left­over mon­ey after cov­er­ing the month­ly expens­es but aren’t sure how much they need to put in their retire­ment fund.  Retire­ment is expen­sive and you need to know how much mon­ey you will need each year.

Most experts say your retire­ment income should be about 80% of your final pre-retire­ment annu­al income.  That means if you make $100,000 annu­al­ly at retire­ment, you need at least $80,000 per year to have a com­fort­able lifestyle after leav­ing the workforce.Facts:

  • Only half of Amer­i­cans have cal­cu­lat­ed how much they need to save for retirement.
  • In 2020, more than a quar­ter of pri­vate indus­try work­ers with access to a defined con­tri­bu­tion plan (such as a 401(k) plan) did not participate.
  • The aver­age Amer­i­can spends rough­ly 20 years in retirement.

Remember…Savings Mat­ters!  Here are 6 Ways to Save for Retirement:

1 – Focus on Start­ing Today – Start sav­ing as much as you can now and let com­pound inter­est – the abil­i­ty of your assets to gen­er­ate earn­ings, which are rein­vest­ed to gen­er­ate their own earn­ings – have an oppor­tu­ni­ty to work for you.  Devel­op a plan and stick to it.

2 — Take Advan­tage of Your Employer’s 401(k) plan – Try to save at least 10–15% of your pay in a tax-advan­taged retire­ment account, such as a 401(k).  Make sure to increase your con­tri­bu­tion or at least set up an auto-esca­la­tion so that you put in more each year.

3 – Meet Your Employer’s Match – If you employ­er offers to match your 401(k) con­tri­bu­tions, make sure you con­tribute enough to take full advan­tage of the match.  For exam­ple, an employ­er may offer to match 50% of employ­ee con­tri­bu­tions up to 5% of your salary.  That means that if you earn “$50,000 per year and con­tribute $2,500 to your retire­ment plan, your employ­er would add anoth­er $1,250.  It is essen­tial­ly free mon­ey!   Don’t leave it on the table.

4 — Invest in an Indi­vid­ual Retire­ment Account (IRA) – There are two IRA options: a tra­di­tion­al IRA or a Roth IRA.  The tax­es from your con­tri­bu­tions and with­drawals are dif­fer­ent with these two types of IRA’s so be sure to choose the type that is right for you.

5 – Take Advan­tage of Catch-Up Con­tri­bu­tions – Turn­ing 50 years old has some advan­tages, includ­ing being able to con­tribute more to your retire­ment account with catch-up con­tri­bu­tions.  In 2022, you can add an extra $6,500 per year in catch-up con­tri­bu­tions, bring­ing your total 401(k) con­tri­bu­tions to $27,000.  For either a tra­di­tion­al or a Roth IRA, the annu­al catch-up amount is $1,000 which boosts your total con­tri­bu­tion to $7,000.

6 – Find Out About Your Social Secu­ri­ty Ben­e­fits – Social Secu­ri­ty retire­ment ben­e­fits replace 40% of pre-retire­ment income for retire­ment ben­e­fi­cia­ries.  You can esti­mate your ben­e­fit by using the retire­ment esti­ma­tor on the Social Secu­ri­ty Administration’s website.

Debra Green­berg, Direc­tor of Retire­ment and Per­son­al Wealth Solu­tions for Bank of Amer­i­ca said, “Rec­og­niz­ing the need to put mon­ey away for retire­ment is the first step.”  Under­stand­ing how much you want to save and set­ting goals to achieve your finan­cial goals is vital.  Start­ing too late and sav­ing too lit­tle is a com­mon regret among retirees.  Mak­ing the effort now can help you look for­ward to your gold­en years.

Even with these tips, you’ll need more infor­ma­tion.  Talk to your bank or finan­cial advi­sor to get prac­ti­cal advice to start sav­ing today!