Retirement looks different for everyone. Some want to stop working ASAP; others plan to work forever. At Zimmerman Wealth Management, LLC® (ZWM) we prefer to talk about financial freedom; gathering the resources to enable you to do what you want. No matter your goal, most people are a little confused about retirement. In this article, we outline the basics so you can move forward with confidence. As a reminder, in our last article, we provided a tool help you evaluate your current retirement situation.
A common retirement questions is: “Where should I save my money?” For most people, there are two options:
- Work – many employers offer retirement accounts like a 401(k) or 403(b).
- Personal – you can also open an Individual Retirement Account or IRA.
How do you know which to use? Well each has pros and cons, but generally, the key factors are:
- Does your work match your retirement savings? If so, you should at contribute enough money to get this match (it’s free money)!
- How much do you want to contribute? You can contribute $19,000 to work accounts ($25,000 if you are at least 50 years old). You can contribute $6,000 to an IRA ($7,000 if you are 50+).
PS. You can use both an IRA and a work account. In fact, it’s common to transfer money from a work account into an IRA after a job change (contribution limits don’t apply to this kind of transfer).
How much should I save?
The general advice is to save 10-15% of your income for retirement. Don’t panic! We know 10-15% is an intimidating goal. Some tips to get there:
1. Increase your retirement savings 1% every 6-12 months. Mostly likely, you won’t notice your paycheck going down 1% (unlike if you tried boosting your savings by 5%).
2. Increase your retirement savings after a raise. For example, if you get a 2% raise, put an extra 1% into your retirement. Your paycheck will still get larger, so you’ll never miss the 1%.
These changes will get you to 10-15% sooner than you think!
Owning a business is complicated, and retirement is no different. There are a number of unique retirement accounts for business owners like SEP-IRAs, SIMPLE IRAs, and solo 401(k)s. Unfortunately, these accounts are too complex to go into here. If you’re interested, we encourage you to reach out to a financial advisor like ZWM who can help.
We could devote an entire article to investments, but the key is to ensure your retirement investments have the right balance of risk/growth for you. For a free review of your current retirement investments, please contact us here and mention Evanston Woman.
While this is just an overview, we hope you feel confident to take action to improve your situation. If you missed us at Evanston’s Woman’s A Busy Person’s Guide to Life’s Challenges with Keynote Speaker Debi Lilly on November 2, 2019 at Normandy Remodeling in Evanston. We are happy to meet and share the importance on planning for your legacy.
Comprehensive financial planning for the many seasons of your and your family’s financial life. At Zimmerman Wealth Management, LLC (ZWM), we see clients move from season to season: from emerging investors such as early-career professionals and entrepreneurs, to mid-career accumulators, to transitioning to retirement or sale of a business, to finding the best ways to pass on a legacy. We are there to help guide our clients through the arc of their financial lives. Our clients benefit from our personalized service, years of experience, flexibility, agility and individual focus on each of their unique situations; we are here to help to provide the best options for clients to achieve their goals, whatever they may be.