Tips to Keeping Your Retirement Plan on Track
Summer is just around the corner, but that’s no excuse to take a vacation from checking up on your retirement plan. A recent Women & Co. study found that women feel personal traits—hard work, discipline, and intelligence—are more important to financial success than external factors such as education, family and luck. So when it comes to achieving a comfortable retirement, it’s up to you to stay in the driver’s seat.
1. Know Your Numbers: Calculate how much retirement savings you will need in order to live comfortably for an average of twenty to thirty years. Remember, women typically spend more years in retirement and need to plan accordingly. Inflation will lessen the value of your money over time. Historically, the inflation rate is about 3 percent so be sure to factor that into your calculation. Once you know your number, determine how much you should be saving monthly and annually to achieve it.
2. Maximize Contributions: Contribute the maximum amount to your employer-sponsored retirement plan each year and take advantage of any employer match that is available to you. This is particularly important for women who are more likely to take time out of the workforce to care for family members. Take advantage of “catch up” rules —if you’re fifty or older—that allow you to put even more money into your retirement plan.
3. Review Your Benefits: Make sure you know the types of benefits you will be entitled to from your pension plans (from both current and past employers), as well as the Social Security Administration, once you reach retirement age. Check your annual Social Security benefit statement for accuracy.
4. Cover the Long-Term: Plan for the unexpected. Be aware that Medicare, health insurance, and/or disability insurance often do not cover long term care costs (e.g., nursing home and assisted living). Learn about long-term care insurance and evaluate whether it is suitable for your situation.
5. Make a Date: Your retirement plan should evolve along with you so it’s important to evaluate it regularly. Meet with your financial advisor a minimum of once a year to reassess, and perhaps rebalance, your retirement plan in response to your changing life goals and needs.
If you need help, ask.