With 309 million Google search results, you can find plenty of information about “retirement savings.”
While many of those results are helpful, some information floating around the web isn’t accurate or applicable to you.
Do you have the full picture when it comes to planning for your retirement? Below, we discuss common myths that could affect how you think about your saving strategy.
“My 401(k) provides enough money.”
A lot of sources recommend maxing out your 401(k) or 403(b) to retire in comfort. It is true that your 401(k) is an important way to build wealth and reduce your current taxable income. However, even with a long timeline of contributions, most people won’t have enough income from their 401(k) to sustain them during retirement. This is especially true for high-income earners whose lifestyles would need to change considerably.
Currently, the most you can contribute if you are below the age of 50 is $19,500 per year. People above the age of 50 can put in $26,000 annually.
For many, this means other types of saving and investing are necessary to live the life they envision (and to prepare for unforeseen expenses). Investment planning and the use of extra savings tools, like an IRA from a Waco bank, are necessary additions to your retirement plan.
“I will continue to work after retirement.”
People often assume that a part-time job can support them in retirement. And in fact, many retirees are returning to the workforce. Concerns about the cost of living and insecurities over the stability of Social Security payments have them searching for supplemental income.
This solution becomes problematic as people age. Jobs that call for physical labor or knowledge of the latest technology can become difficult to keep. Additionally, seniors may have health issues that would derail their employment income.
Most investment managers do not recommend part-time work as a viable strategy for retirement income. Part-time work can be a great source of extra income for some. But a solid financial plan now is the best way to ensure your needs are met later down the road.
“My savings goals are on track.”
One of the most arbitrary objectives for most people is how much to save for retirement. It is easy to set monthly saving goals and then let them slip as other needs arise. People often have a hard time seeing the full picture of their spending habits when working full-time. How much and how often you spend would need to change on a fixed income.
To get a better idea of how your lifestyle affects your retirement plan, ask yourself these questions:
- How much do you spend on an annual basis?
- How do your needs and wants evolve each year?
- How are you meeting cost increases?
- How are you at saving and managing money?
Many people find that reducing costs — not amassing a large amount of savings — is the key to living well in retirement.
The Retirement Savings Advice You Can Trust
At the end of the day, planning for your future requires a personalized strategy. Your age, health, and spending habits will change over time, and your strategy should account for that.
The banking officers at TFNB in Waco and McGregor have the knowledge and tools to help you develop this personalized strategy. We pride ourselves on being your bank for every part of life — including retirement.
If you have more questions about saving, retirement, your 401(k), or your Roth IRA, our team is just a phone call (or a few blocks) away!