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Planning for retirement regardless of age or income

Posted by Louisa Walker on Oct 23, 2017 21:00:00 PM

Topic: ALL

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If you’re in your 20s or 30s, you’re probably thinking, "I’m young! Why do I need to think about retirement planning at my age?”

The fact is, it’s never too early to start because the power of compounding interest is on your side. And, whether you’re just beginning to save or have reached middle age and haven’t started thinking about retirement income, it’s one of the most important financial exercises you can undertake.

Regardless of your age or your income level, maintaining lifestyle expectations through a retirement that may last 30 years or more requires careful planning.

Retirement means different things to different people. Making sure you have enough income and assets to live comfortably will let you retire from your job, not your way of life. What will your retirement cost? Well, not only will your life be quite different compared to today, so will your expenses. Generally speaking, people need between 60-80% of their pre-retirement income to maintain a comfortable retirement lifestyle. Consider your basic and essential needs, and then determine what discretionary categories, such as hobbies or travel, you want to have covered when you retire.

There are many ways to help ensure you have a comfortable financial cushion for retirement and do not outlive that income. Consider these tips:

  • Build retirement savings into your savings goals as early as possible so you gain the advantage of compounding interest.

  • Participate in and contribute at least the minimum amount to your employer’s 401 (k) program to get any available matching funds.

  • Save for your retirement before your children’s college costs. You can always borrow for college, you can’t borrow for retirement.

  • Research all your options and plan accordingly to cover any long-term care expenses.

  • If you are over the age of 50, take advantage of “catch up provision” contributions in your qualified plans that allow you to save even more for your retirement.