Tips to Help You Prepare for Retirement

When you are in the prime of your life, retirement may seem like a long way off in the future. Maybe this perception is the reason why 60 percent of Americans haven’t determined how much they’ll need for retirement. However, if you want to enjoy a financially secure retirement, now is the best time to start.

How Much Money Will You Need?

Everyone has different needs and expectations. Nevertheless, considering the average spends 20 years in retirement, the Department of Labor calculates that you will need between 70 to 90 percent of your pre-retirement income to continue your standard of living through your retirement years.

For example, if you earn $5,000 a month, you’ll need a little over $1.2 million to maintain your living standard for 20 years. Social Security benefits will cover about $370,000 of the $1.2 million. So you’ll need to save about $830,000 to maintain your living standard at that income level.

Saving over $800,000 may seem like an impossible task, but it is more achievable than you may think. For example, if you start saving $500 a month at age 25 in a Roth IRA account with a 7% return, you’ll have $898,358 by age 65. If you’re 35 years old, you would need to double your monthly contribution or work 10 years longer to reach that amount.

How to Get Started With Your Retirement Plan

When you make up your mind to start the process, you can begin by setting goals. Primarily, decide how much money you can realistically save in a month and how much money you want to save by retirement. Once you have set some concrete goals, you can use the following tips to prepare for a financially comfortable retirement.

Assess Your Net Worth

To assess your financial condition, you need to calculate your net worth. You can do this by tallying up all of your assets, such as your house, car, investments, and cash. Then, deduct all of your outstanding debt, including your mortgage, car payments, and student loans. Knowing your net worth is important because it is the focal point of your financial profile.

Even if you can only save $60 a month, you should start saving that amount until you begin contributing more. Before paying your bills, groceries, and other expenses, deduct your monthly savings from your paycheck and place it in a separate account until you find a retirement account with the best return.

Grow Your Savings with a 401(k) Plan

Check with your employer to see whether they offer a 403B or a 401(k) plan. Over the past five years, the average 401(k) account has had a healthy 9.5% return rate. Obviously, it is important that you continue to commit funds from your paycheck even when the markets are negative, or in a prolonged slump. In fact, it is even more important then! If you continue to add funds in negative market environments, you will be buying more shares of the depressed funds that performed so well in previous years. Then, you will have a lot more shares when there is a recovery, and over time this will give you better results. This concept is referred to as “dollar cost averaging” and it works well over longer periods of time. Also, you can make it easier to save by allowing your employer to direct deposit funds from your paycheck to the 401(k) account automatically, every pay period.

Some companies will match a certain percentage of your contribution to the 401(k) plan. Typically, most companies match 50 cents to the dollar up to 6% of your pay. Also, your employer may offer an automatic escalation feature that will automatically boost your contribution by 1% each year.

Contribute to An IRA

You can open an Individual Retirement Account (IRA) or Roth IRA through your bank or brokerage. The yearly contribution limit is $6,000 for customers under 50 years old and $7,000 for people over 50.

In a Roth IRA, your after-tax contribution appreciates tax-free, and your withdrawals are penalty and tax-free after you reach 59½ years old. On the other hand, you must pay taxes on your traditional IRA balance after age 59½ at whatever the current tax rates are then.

Take a Part-Time Job

Working a side job would help you earn extra money to increase your monthly contribution. Within the gig economy, businesses offer many job opportunities with very flexible work hours. Try searching online on sites like,, and Career Cloud.

Select a Debt to Pay Off

You can add to your retirement savings by paying off one of your debts ahead of schedule. Then, along with saving on interest expenses, you can assign the money you’ve already designated for the loan payments to your retirement account. For example, you can accomplish this task by adding $100 a month to your debt installment until you ultimately pay off the debt.

Use a Finance App

Free downloadable finance apps can help you track your spending, manage your debt, and organize your budget in a streamlined manner. Additionally, they can enhance your financial knowledge through the tutorials as you use them. Overall, the best apps for this purpose are: You Need a Budget (YNAB), Mint, Simplifi by Quicken, PocketGuard, Goodbudget, and Stash.

Open a Social Security Account

Suppose you want to determine how much in Social Security you will get at retirement. In that case, the Social Security Administration allows you to set up a My Social Security Online Account, at . It is a valuable tool for learning about your Social Security benefits and keeping tabs on your future benefit amount.

If you want to make the best of your retirement years, there is no time like the present to get started. So many options and resources are available to you that prior generations didn’t have. Once you begin, you will discover that managing your retirement plan is not as complicated as you thought and that reaching your retirement goals is possible. Patience and even being stubborn in rough periods are key!

Published by Robert Ryerson

A financial professional with more than three decades of experience, Robert Ryerson works closely with clients in the Freehold, New Jersey, area to meet their financial planning needs. As a Certified Financial Planner (CFP) at New Century Planning, he focuses on retirement income planning, as well as estate administration, regularly assisting his clients with legacy and estate planning. He also advises them on health and disability insurance, including Medicare, Medicaid, and Medicare Supplement Plans. Mr. Ryerson’s many years helping his clients navigate the complexities of retirement planning gave him a deeper understanding of the healthcare costs that retirees face. In 2013, he drew upon this knowledge to co-author the book What You Don’t Know About Retirement Will Hurt You. Outside of his work at New Century Planning, Robert M. Ryerson is a regular fixture at workshops and seminars on retirement. He has delivered several keynote speeches on the often-confusing topic of required minimum distributions. Mr. Ryerson continues to share his financial expertise as a facilitator of online courses for Certified Public Accountants through The Society for Financial Awareness. In the early 2010s, Mr. Ryerson became concerned about the threat of identity theft after noting the many cybersecurity breaches suffered by major companies. He became a Certified Identity Theft Risk Management Specialist (CITRMS) in 2014. He has since taught identity theft recovery courses at local community colleges. Mr. Ryerson also wrote a book on the topic entitled What’s the Deal with Identity Theft: A Plain English Look at Our Fastest Growing Crime. A graduate of Rutgers University with a degree in economics, Mr. Ryerson began his career in the financial services industry as a stockbroker. He obtained his CFP designation in 1991 and began working as an independent financial planner a few years later. In addition, he is a notary public.

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