One of the lasting benefits you can provide your employees is encouraging them to plan now for their retirement. By investing the time to plan their future finances, they will be able to retire with financial security. Here are eight ways you and your employees can prepare:
Determine your retirement needs.
Estimates suggest you will need about 70 to 90 percent of your pre-retirement income to maintain your standard of living when you stop working. Being aware of the amount of money you will need will help you stay on track for a secure retirement.
Understand basic investment principles.
A variety of factors will influence how much you will have saved at retirement, including inflation, type of investments, and how long your money has had time to grow. Pay attention to your investments and meet with a financial advisor on a regular basis to ensure you are staying on track to meet your financial goals. Diversify your investments to reduce risk and improve return. Knowledge equals financial security.
Contribute to your employer’s retirement savings plan.
If your employer offers a retirement savings plan, start contributing. Set a goal to contribute at least enough to qualify for the full employer contribution.
Set realistic goals and stay committed.
Set a realistic savings and investment strategy to meet your financial retirement goal. If needed, start small and increase the amount over time. The sooner you start saving, the more time your money will have to grow.
Don’t touch your retirement savings.
If you withdraw your retirement savings prematurely, you will lose principal and interest and possibly tax benefits. You may also have to pay withdrawal penalties. If you change jobs, don’t withdraw the savings; instead, roll them over to an IRA or your new employer’s plan.
Invest in an Individual Retirement Account (IRA).
There are two IRA options – traditional and Roth. The tax treatment of your contributions and the after-tax value of your withdrawal will depend on the type of IRA you choose.
Learn about your Social Security benefits.
Review your annual Social Security statement so you are familiar with how much your estimated benefit will be and when you can expect to receive it. For more information, visit www.socialsecurity.gov.
Ask questions.
While these tips provide suggestions for preparing for retirement, you need more in-depth information to determine your retirement needs and make sound investment decisions. Consult with a financial adviser for more detailed information and guidance.
Reference: https://www.dol.gov/general/topic/retirement
