What do you have for us today on Money Monday, Mellody?
Well Tom, it is November 11 and you – the hardest working man in radio – are about to hang up your mic! So before I go any further, I want to recognize your incredible career, your incredible team – Sybil, Skip, and everyone else – and thank you for giving me the opportunity to share my passions on your show all these years, and for a few more times before the year is out!
Thank you, Mellody!
You are so welcome, Tom! Since you are about to retire, we are going to focus on retirement for the remaining Money Monday segments. I want to share some lessons our listeners should keep in mind when it comes to saving up for the golden years, and today we are talking retirement 101.
I think this is a great idea, Mellody. What is the first financial for retirement 101?
Start saving now if you haven’t already. We are often our own worst enemies when it comes to saving for retirement. You can probably think of plenty of reasons not to save. It’s too late to start saving. You won’t be able to save enough You have more urgent financial issues. But the truth is there is nothing more important than planning for the future, and there is no time like the present to start saving. Start out by trying to save 10 percent of your income. And if you can’t do that start smaller – save $20 per week – and work to save a bit more each month. At the end of the day, every dollar you save now – every one – makes your financial future brighter.
What is the next tip?
Once you have started saving for retirement, make the process automatic. Saving for retirement every month can be tough if you have to make the decision, and you can be tempted to spend the money allocated for contributions on things that give you more immediate gratification. Automating your savings ensures you are saving regularly.
Ok. We have started saving money for retirement. What is the next step?
You want to set a savings goal for yourself. Having an idea of why you’re saving rather than spending it makes saving easier. According to the United States Department of Labor, you will need at least 70% of your preretirement income to live comfortably, but this assumes you will not have mortgage payments or other expenses like those associated with commuting to work. You want to think about what you want your retirement to look like, what expenses you will have, and then determine how much money you will need to save make this a reality. There are several retirement calculators out there you can use to estimate your goals, such as the MarketWatch Retirement Calculator, the Bankrate Retirement Calculator, or the US Department of Labor Calculator. This will help you internalize that your retirement goal is not determined by age, but by a monetary amount.
Fantastic. What is our final lesson today?
Take advantage of tools that help you save for retirement. For example, the federal government gives a tax break to those who save for retirement. You can defer paying tax on up to $18,000 that you contribute to a 401(k) plan and $5,500 that you save in an IRA. For people age 50 and older, the contribution limit is higher! And if your adjusted gross income is less than $30,750 as an individual or $61,500 for a couple, there is a saver’s credit on your retirement contributions. Also, you want to check our perks at work! Depending on your employer, there may be money on the table for your retirement. Many companies match contribution to a 401(k) or another retirement plan on for workers, while others have profit-sharing plans. If your company matches your contributions, take advantage of it! That is free money!
Thanks for the retirement 101, Mellody. We are looking forward to seeing you more before the end of the year!
Thanks, Tom. Next week we will be talking about different types of retirement accounts!