For all chapters of life
Tips
- Maintain an emergency fund for unexpected expenses
- Enroll in your retirement account and review it each year
- Check and update your beneficiaries for retirement and other financial accounts annually
Pitfalls
- Not saving for retirement because you think it’s too early, too late or too little
- Taking early withdrawals or loans from your retirement account without being aware of the impact
- Reacting too quickly to market volatility, potentially undermining your long-term goals
Make a budget – Establishing a budget in your 20s allows you to build good money habits early, including saving for retirement.
Start saving – While retirement may seem like a long way off, the sooner you start putting money aside, the sooner you can take advantage of compounding to help grow your savings. It’s OK to start small!
Learn about managing your money and investing – Understanding the basics can help you make better financial decisions; our educational resources can help.
Consider Roth options in your plan – Not all plans offer Roth, but if yours does, it could make sense to contribute to one if you have many working years left and are in a lower tax bracket now than you might be in retirement.
Putting off saving for retirement because you think you have plenty of time.
Not starting to save because you can only save a small amount.
Boost your retirement plan contributions – As your earnings grow, steadily increase your contributions so you’re also saving more for retirement; even a 1% or $25-per-paycheck increase each year can make a big difference!
Consider a health savings account (HSA) if you’re eligible – Contributing to an HSA can help you save and invest for medical expenses you have now and in retirement.
Consider consolidating retirement accounts – If you’ve changed jobs, you may have accounts at previous employers; you may be able to combine those accounts with your current one so it’s easier to manage your savings.
Reducing or stopping contributions as your expenses grow.
Not knowing your asset allocation – Your investment mix should fit the amount of time you have until you retire, how comfortable you are with risk and your investing goals, which can change over time.
Check your progress – See if you’re on track to reach your retirement goals so you can make adjustments to your plan; use My Income & Retirement Planner in your account.
Continue increasing your contributions – If your expenses or standard of living has increased, you may need a higher amount of money to maintain your lifestyle in retirement.
Check your asset allocation – Ensure your mix of investments fits your risk tolerance and how long you have left until you retire; you may be invested in an option that takes care of your asset allocation for you, such as a target date fund that automatically rebalances (if not, consider talking with us or your financial professional before making changes).
Underestimating your retirement needs, especially if your lifestyle has changed.
Putting college expenses ahead of retirement, without considering how to balance both to reach your goals.
Take advantage of catch-up contributions – When you reach your 50s, you become eligible to contribute an additional amount to your retirement account and IRAs; contributing the most you can can help keep your retirement plans on track (explore the limits).
Estimate your retirement budget – Now that you’re closer to retirement, put together a ballparked estimate of what your retirement budget may look like.
Plan for health care needs – Health care can be one of the largest expenses for retirees, so plan for out-of-pocket expenses; consider taking advantage of an HSA if you’re eligible.
Leaving retirement planning until the last minute so you have less time to make adjustments.
Not paying off debt to help improve your financial picture in retirement.
Consider staying in your retirement plan – There are benefits to staying in your retirement plan even after you’ve retired, such as potentially lower fees and continued access to knowledgeable professionals at no extra cost.
Decide when to claim Social Security benefits – While you can start receiving your benefits as early as age 62, claiming early will permanently reduce your benefit; if you wait to claim until your full retirement age (age 66 or 67, depending on your birth year) you’ll receive 100% of your benefit — and get 8% more for each year you wait after that up to age 70.
Create a withdrawal strategy – Consider working with a financial professional to help you plan how to draw down your savings in the most tax-efficient way, which can help your money last longer.
Failing to plan for required minimum distributions (RMDs), mandatory withdrawals required by the government once you reach your RMD age, which varies depending on your birth year.
Not having an estate plan, which can help protect you and your loved ones no matter how much you have.
Plan for a lifetime of memories
No matter how far along you are, contact us or work with your financial professional who can help you plan for and manage your finances in retirement. They can help ensure you’re taking steps to make your money last in and through retirement.
For more insights on how to manage your finances, take advantage of our other resources.