Many employees need more knowledge and motivation to prepare for retirement. But helping them understand how important consistent saving is can help them secure their future.
Employees should also consider the cost of lifestyle inflation as they plan for retirement.Â
Set Goals
As you save money, setting goals that reflect your plans is important. For example, consider setting up an automatic transfer on the same day you receive your paycheck that earmarks funds for retirement savings. This will help you remember to save consistently. In addition, having a separate emergency account will help prevent you from draining your retirement savings when an unexpected expense arises. Another important goal is to reach retirement debt-free. This includes credit card and student loans and any mortgages or car payments. Getting rid of this debt can significantly improve your financial health. Having a financial advisor you can work with as you grow closer to retirement is also a good idea. An experienced investment professional can help you develop a savings plan like a Boeing pension to ensure your nest egg lasts throughout your retirement. They can also recommend strategies for reducing inflation risk and protect against market downturns.
Create a Budget
Once you’ve saved enough money, creating a budget is time. Although many people think of budgets as killjoys, they are one of the most important tools to help you save money and keep your spending in check during retirement.
When creating your budget, start by reviewing your bank statements and writing down all the money that comes in and goes out each month. Then, list all your expenses, including those that may change in retirement, such as eliminating commuting costs. Other changes may include downsizing your home, traveling less, or limiting your dining out.
Once you’ve established a base for your necessary expenses, consider adding fun spending such as new hobbies, social activities, and travel. It’s also important to factor in potential inflation, which could increase the cost of many things you’ll purchase during retirement. This is why it’s crucial to plan by saving as much as possible during your working years, using work-sponsored 401(k) plans (up to the IRS limit) or individual retirement accounts.
Set Up a Separate Emergency Account
Many employees find it difficult to reach retirement savings goals, citing increasing living costs and student debt as obstacles. This can make it hard to save for a comfortable retirement, which could leave them without the means to pay for necessary expenses in retirement, such as health care and housing.
Experts recommend having a reserve covering three to six months of expenses. While saving this amount may seem daunting, it’s possible with small steps and consistency.
One way to help is to set up an automatic savings plan that transfers funds into a money market or savings account on the day of each paycheck. This keeps the money out of sight and out of mind so it can grow without being tempted to use it for daily purchases. Consider saving your tax refund and adjusting your W-4 deductions to add extra income to this emergency fund.
Invest in a 401(k) or Other Account.
Many employees, such as those from Boeing, have little idea what to do regarding retirement planning. This may be because they have competing priorities, such as student loans, competitive job markets, and rising housing costs. But they need to start saving now, especially if they want to be able to retire comfortably.
If they have access to a workplace retirement plan, like a 401(k), they must be sure they’re contributing enough to get the full employer match. They should also consider opening an individual retirement account (IRA) and a health savings account to help them pay for medical expenses during retirement.
In addition, they should try to keep their debt at a minimum, as high debt levels can drag on their retirement income. Finally, they should invest in stable, diversified investments that have the potential to grow over time.Â
