Articles Three Tools to Help You Reach Your Retirement Savings Goals
Saving money for the near future can be difficult. Saving money for retirement, which for some may be decades away, can feel downright impossible. But it is possible. In fact, there are plenty of options when it comes to retirement savings vehicles, such as IRAs and 401(k) accounts. Deciding how you’re going to save for retirement depends on what your goals are, and there are a variety of online tools and calculators designed to help you assess your retirement savings needs and plan for the future. Here are three to consider:
1. Retirement savings calculators. Before you start saving, it helps to know where you stand. The first step: use an online calculator to figure out about how much money it will take to maintain your lifestyle and ensure a comfortable retirement. This will help you determine how much you need to save to grow your nest egg. You can also use financial calculators to track how much you're saving and estimate how long it will take you to reach your retirement savings goals. Another option is to talk to a qualified financial advisor to help you get started on the right path.
2. Employer-sponsored savings programs. Perhaps one of the easiest ways to begin saving for retirement is to take advantage of your employer's retirement savings program. These plans will vary based on the employer. Those who work for a private company may have the option to participate in a 401(k) program. With a 401(k) plan, contributions are automatically deducted from your paycheck each pay period and invested on your behalf. You decide how much you want to contribute (aim to contribute the maximum allowable amount), and in some cases, employers will offer a matching contribution. Another perk of having a 401(k): it's transferrable should you choose to switch jobs. Many public school and tax-exempt employers will offer something similar to a 401(k), called a 403(b). With this plan, employees save for retirement by contributing to individual accounts just like they would with a 401(k), but with the additional option of contributing to a separate Roth IRA account. If you're a federal government employee or a servicemember, you'll have the option of participating in a Thrift Savings Plan (TSP). This tax-deferred savings plan is similar to a 401(k) plan in that contributions are automatically deducted from your paycheck. Talk to your employer about how to contribute.
3. Traditional or Roth IRAs. IRAs can be a big asset when it comes to earning and setting aside funds for retirement. A Traditional IRA allows you to earmark a portion of your income, and if you meet certain income guidelines, you can take a tax deduction for your contributions. A Roth IRA is similar to a Traditional IRA, but you’ll use after-tax dollars to fund the account, and Roth withdrawals are tax-free if you meet certain requirements. Both accounts offer tax breaks, but have different eligibility and withdrawal requirements. Click here for information on eligibility requirements. No matter what tools you use or what type–or types–of retirement savings plans you decide to go with, Navy Federal Credit Union has the resources you need to help you reach your savings goals and be better prepared for your financial future.