Retirement Saving Plans
Your employer’s retirement savings plan is an essential part of your future financial security. If you have a 401(k) or other retirement savings plan at work, sign up and contribute all you can. If your employer also contributes to the plan, sometimes as a matching contribution, fi nd out how muchthe employer match is and how much you need to contribute to get all of it. As noted in the timeline, at age 50, you can begin making catch-up contributions to save even more for retirement. Don’t touch your retirement savings. The longer you leave the money there, the more time it has to grow. If you take money out too early, before age 59½, not only do you lose principal and interest but you may have to pay a tax penalty. At age 70½, you will need to start taking a certain amount out, called a minimum required distribution, or risk paying a penalty.
It is also important to understand how your plan works and what benefi ts you will receive. Learn about the different features or provisions of your plan. Ask your plan administrator, human resource offi ce, or employer for information. Also learn about the rights and responsibilities you have under the federal law that governs your plan, the Employee Retirement Income Security Act (ERISA).
While you are working, take a look at how much you have saved for retirement, how much you might receive in Social Security benefi ts, and what other assets you have. Also, look at your current expenses and think about what they will be in retirement. For instance, your work-related costs will likely go down, while health care costs likely will increase. Starting now can help you make changes while there is time before you retire to make up any savings gap or adjust your goals. Also remember to check your plans at least once a year to see if you need to make changes to stay on track to a secure retirement.
No comments:
Post a Comment