When you retire are you relying on Social Security and pensions to help you through retirement? I hope not!
There's plenty of debate over whether Social Security will still be around when us 20- 30- and 40-somethings retire. However, many companies no longer offer pensions to their employees anymore, so for many of us, that's no longer an option.
So, how are we going to make it through our retirement years?
Are you contributing to your (and/or your spouse's) 401(k)? If not, does your company match your contributions? If they do, and you're either not participating or not contributing up to the maximum company match, you are just throwing money away that your employer is willing to give you! Many companies will either offer a 1-to-1 match (for example, if you contribute 3% of your salary, they will also contribute 3%) or they will offer a partial match (if you contribute 4%, they will contribute 2%).
How can you increase your retirement savings?
- Try increasing your 401(k) percentage by just 1% and see what the effect on your paycheck is. Since, the money is pre-tax, it will not feel like a full 1%, since you are not paying federal, state, or local taxes on it (although you are still paying social security and medicare taxes on it).
- When you get a raise, try increasing your percentage savings. Chances are you won't even miss it, since it's money you weren't getting before anyway. For example, you or your spouse gets a 3% cost of living increase. Do you really need the full 3% for your household needs? Try taking 1 or 2% of the raise and put it away in your 401(k).
- If you find that you're getting a big tax refund each year, contribute some of your tax refund money into an IRA (and most likely claim it on that year's tax return). Hopefully, you won't even miss it!
Do you feel like you're saving enough for retirement? Do you have a retirement fund (401(k), IRA, etc)? Have you thought about increasing your retirement savings?
i'm not expecting to ever see any social security benefits.
i've been maxing out my roth ira every year since i had my first summer job when i was 16 and putting in what i need to get my full company match for my 401k.
i think i'll be fine considering that i'm 25 and already have more in my retirement accounts than most people 20 years older than me.
Tia @ Tia Saving Cents
Great article Corrie! I agree that we can not depend on Social Security or pensions but people need to be aware that 401k(s) are just one more option for them to take advantage of and they should not put all their eggs in that basket either. I know most everyone lost some value of their 401K in the recession but with the government seizure of my former employer my 401k was left with the holding company the new bank did not buy and I am now waiting for a bankruptcy court to release the funds so I can roll it over to an IRA and I worry what is left of it won't be released or will be lost. I also had a cash pension with that company that is also all tied up and whether I will see any of that remains to be seen. More then a decade of savings is in there. Thankfully I am not at retirement age now and have time on my side but it is frustrating and stressful. Going forward I will maximize my contribution to get a full match if that is available but I will not put a penny more in and will utilize other investment options.
That's great, Carrie! If only everyone was like you...it's amazing to me how many people are pulling it out of their retirement funds right now rather than contributing. They end up losing about 50% of it when they pull it out due to taxes and penalty.
Yikes...Tia! I hope you are able to get your 401(k) money. Of course, Enron employees had a similar problem. I was actually going to write more about IRA's and Roth IRA's, etc, but I was going to save that for another article. You definitely need to spread the risk around, especially if your 401(k) investment is in company stock (not saying yours was...just thinking of Enron).
I would like to learn more about investments. Where is the best place to one's money in a 401K, my company does not match it. But I'm contributing.
Thanks any info. would be helpful.