For many, retirement may last longer than expected. Because inflation will most likely decrease the purchasing power of your money, your dollars may buy less during your retirement than they do today. For example, at 3.5% inflation, $100 today would be worth only $42.31 in 25 years, and it would be further reduced to $30.00 in 35 years.
The first step in developing a savings strategy that best meets your retirement needs is determining your objectives. How do you envision your “golden years”? Spend some time thinking about what is really important to you. Thinking about it early puts time on your side.
The second step in planning is to determine from where you will attain your retirement money. With Social Security, the benefits received are based on the income you have earned over the course of your life, subject to a maximum amount. It offers, for most, only a base level of income, which many retirees supplement with savings from employer-sponsored plans, such as pension plans, 401(k) plans, 403(b) plans, Simplified Employee Pensions (SEPs), and Savings Incentive Match Plans for Employees (SIMPLEs). The tax advantages and, in many instances, matching contributions from employers, make these savings vehicles a popular complement to personal retirement savings, which often include traditional Individual Retirement Accounts (IRAs) and Roth IRAs.
Now that you’ve thought about your retirement objectives and your potential sources of income, the last step is developing a financial strategy that works for you. It’s never too late to start saving, and the sooner, the better.
This article appears courtesy of Nancy J. LaPointe, MBA, CFP®, ChFC, CLU, Financial Services Representative. Nancy is a Senior Financial Planner offering fee-based financial planning services through MetLife Securities, Inc.,(MSI) a registered investment adviser, New York, NY 10036. She focuses on meeting the individual insurance and financial needs of people in the South Sound, pre-retirees and retirees. You can reach Nancy at the office at 360-238-0312, 4520 Intelco Loop, Ste 1E, Lacey, WA 98503 or on her cell phone at 360-402-3200. Insurance and annuities issued by Metropolitan Life Insurance Company (MLIC), New York, NY 10036. Securities, including variable products offered through MetLife Securities, Inc. (MSI)(member FINRA/SIPC), New York, NY 10166. MLIC and MSI are MetLife companies.
