Retirement planning can be tedious and intimidating for many people. As your financial allies, we at Valley Credit Union want to reduce the heavy lifting on your part.
Keep reading to find information and resources to address your biggest points of pain and confusion. Hopefully, by the end of this post, you’ll have solid answers to your most pressing retirement savings questions and a good idea of logical next steps.
Getting Started On Saving For Retirement
We recommend working with a qualified financial professional to figure out what kind of retirement plan suits you best. They will:
- Have insights into resources, laws and regulations, financial instruments that are available, and so on
- Be able to recommend different appropriate options
- Educate you so you can be a savvy consumer and ready for retirement
It’s their job to guide you through the critically important task of preparing for your retirement.
However, there’s plenty you can do on your own to start moving you in the right direction.
How Much To Save For Retirement
Knowing how much you’ll need for retirement is a great place to start. If you don’t have a financial planner yet, you can use a retirement calculator to help you figure this out. This handy tool lets you enter in amounts or percentages for elements like:
- Current age
- Desired retirement age
- Annual income (and % growth in that income each year)
- Other savings and income
- Amount you save each year towards retirement
- Current retirement savings
- Expected rate of return on your retirement savings
- Annual income needed during retirement
- Expected number of years you’ll need retirement income from your retirement savings
These calculators generally factor in a reasonable inflation rate.
From all this data, it generates figures for how much you’ll have for retirement and if you need to start saving more to meet your requirements. The convenient thing about these retirement calculators is that you can finagle the numbers and see how adjusting any one lever impacts your retirement savings needs and progress. Give it a whirl!
Here are a couple retirement calculators from reputable sources that you can try:
When To Save For Retirement
There’s no one-size-fits-all answer to the question of when to save for retirement. It’s highly personal and very dependent upon your unique needs and considerations.
You’ll probably find your ability to contribute to retirement savings fluctuates over time. For example:
- New college grads often don’t have the discretionary income to put much away toward those golden years.
- Young couples — who are buying a home and starting a family — might see a dip in their capacity to save for retirement.
- Those with significant debt may need to pay down those obligations before paying into their retirement accounts.
This said, your best bet is to start as early as you can (as long as it makes sense in the context of your overall financial goals and plans). The sooner and more you save, the more earning power and flexibility you’ll have with your financial resources. (This is in large part due to compound interest.)
FAQs — Retirement Saving Timetable
We’ve cobbled together some of the most common questions regarding the timing of retirement saving. Trust us, if you’re wondering about something, so are hordes of others!
Should you save for retirement or pay off debt?
The short answer is that it’s probably best for you to pay down your debt first. This is because financing debt usually costs more than you would earn on your retirement savings investments. For example,imagine that your credit card charges 20% interest on unpaid balances and your IRA yields 8% returns. Putting money into your IRA instead of paying off that card balance is costing you 12% (i.e., 4% more than you’re earning from that IRA).
Should you save for retirement or a down payment on a house?
Financial planners will likely recommend saving for retirement first. But, you do need a place to hang your hat at the end of the day. The key in this scenario is to strike a balance. Examine your lifestyle to see if you can find ways to boost your income and/or reduce your expenses. Sometimes it just takes a bit of creative finesse to accomplish both successfully planning for retirement and purchasing a home.
Should you start saving for retirement in your 20s?
If you can swing saving for retirement in your twenties — do it! Starting early in your life and career roots you in smart and sustainable financial wellness habits. And by starting young, you’re giving yourself tons of time for your investments to work even harder for your retirement objectives. Many experts recommend trying to contribute 10% of your income to retirement savings.
Should you start saving for retirement at 30?
Yes! In your thirties you still have loads of time to build wealth. Money you inject into your retirement funds have years to accrue all that compound interest. However, you may need to contribute more per year to reach your savings goals than if you’d started in your twenties.
Should you start saving for retirement at 40?
Don’t wait another moment. Anything you can earmark for retirement savings will serve you well. Starting to save in your frites may mean you’ll need to follow a more aggressive savings plan or adjust what retirement life looks like to you.
Should you start saving for retirement at 50?
While saving for retirement early vs later is better, it’s never too late to begin saving or increase the amount you’re putting aside. Again, with fewer years for your savings dollars to snowball into a sufficient retirement income, you might have to re-evaluate your retirement plan.
Ways To Save For Retirement
There are so many ways to save for retirement. This is welcome news because different people have different circumstances and needs. The takeaway here, though, is that there’s definitely a way for you to start, continue, or ramp up your retirement planning.
Where To Find Money For Retirement Savings
Let’s pick at the low hanging fruit first. These are common or no-brainer sources of money to siphon into your retirement accounts.
Set aside a portion of each paycheck for retirement. How much you allocate will probably vary depending upon other demands on your income, but the basic concept holds.
Gifts and other income.
Get a $50 birthday check from grandma? Have a side hustle that rakes in a few extra bucks? Putting money you gather from your gigs and special occasions into retirement savings is a really effective, adaptive way to fuel your retirement planning.
These are awesome for three main reasons. One, you’re investing pre-tax dollars. This can reduce your tax obligation come tax time and when you take disbursements from the 401K. Two, many employers match your contribution up to a certain percentage. This is FREE money, so take it! Three, it’s generally easy to do. Your company has the fund set up and professionally managed. All you have to do is enable paycheck-deducted contributions and you’re good to go.
Instead of just finding ways to increase the cash inflow to feed your retirement savings, maybe there are opportunities to free up existing money by downsizing or altering your lifestyle. It doesn’t have to be life-diminishing. Simple swaps — like making your own coffee in the morning or biking to work instead of that rideshare — can keep a sizeable wad of bills in your pocket, which you can then add to your retirement fund.
VCU Retirement Savings Options
Once you’ve determined how much to save and where you’re going to find that money to save, you’ll need places to actually invest those dollars. This is another area in your retirement plan that Valley Credit Union can help.
VCU offers an array of retirement plans, savings accounts, and investment certificates. This product mix can get you to and through retirement. Plus, you get the perks that go with being part of a credit union — like great rates and outstanding customer service.
Credit union IRAs are a popular choice. As a VCU member, you can take advantage of benefits such as competitive rates, low minimum deposit requirements, and no maintenance fees.
Having a credit union savings account is another smart move. We have a variety of account types to fit your needs. However, all are FDIC insured up to $250,000, earn daily dividends, and are easily accessible via branch offices, ATMs, online, or mobile banking.
Again, VCU has a selection of certificates to meet your requirements. These are often used by those looking for higher returns and longer investment horizons.
As a Valley Credit Union member you have access to these helpful resources. They provide everything from tools to tutorials on all things retirement planning — like saving for retirement, long-term care, and more!
Valley Credit Union, Your Saving-For-Retirement Partner
Just thinking about retirement finances can be daunting. Don’t worry, though. You don’t have to go it alone. Valley Credit Union’s here to guide you each step of the way.
Our expert and caring team wants to help you achieve your retirement savings goals. With that in mind, we’re able to assist members in each phase of their lives to plan and implement a savings strategy that makes sense and is actually doable.
Plus, as a credit union, VCU has outstanding products, services, and tools you won’t find at regular banks or investment houses. Our exclusive offerings are available to all members and make it that much easier to save for retirement. Become a VCU member!