RETIREMENT PLANNING IS AS INDIVIDUAL AS YOU ARE.
Plan now for a fulfilling future
Different people have different plans for what they would like to do once they stop working. This is a significant life step, and you should consider what you will do with all that time, energy and drive once you leave full-time employment.
A successful retirement begins with envisioning a rewarding, healthy and responsible lifestyle.
- Think about what would make a perfect week for you.
- Imagine what you would like to do during each season of your ideal year. The most rewarding things for you may not necessarily require the most money.
- Visualize a day-to-day style of living that will motivate your mind, maintain your health and build relationships within your community.
It’s very valuable to your quality of life to think about retirement and, most importantly, to think about the finances you’ll need to realize the way of life you imagine. We know that putting money aside for retirement can be challenging, but here’s the best thing you can do for yourself: Save as much as you can as soon as you can, and stay disciplined.
Look at the difference ...
Source: Legg Mason, 2015. The above information is for illustrative purposes only. All three investors contributed $5,500 annually to an IRA. This illustration assumes a hypothetical pre-tax return of 7%, compounded annually. This example does not take into account any taxes, fees and expenses. It also does not reflect the impact of taxes. Withdrawals from a tax-deferred account are taxable as ordinary income in year made, and early withdrawals prior to age 59½ are generally subject to a 10% additional federal tax. Please note that Legg Mason, Inc. does not provide tax advice.
And your money may have to go a longer way. A growing focus on health and fitness, the availability of excellent medical care, and ongoing scientific advancements afford today’s retiree an opportunity to stay healthier and live longer than ever before. In fact, today’s retiree is likely to live 20 or more years after retiring.
We're living longer, so retirement lasts longer
Average life expectancy in the U.S.:
Sources: Central Intelligence Agency, The World Factbook 2015; CRS Report for Congress: Life Expectancy in the U.S., August 16, 2006.
Save today for a comfortable tomorrow. The three main sources of retirement income are Social Security benefits, employer-provided retirement plan accounts and personal savings. Social Security benefits are intended to cover just a portion of your post-retirement income needs. It is important to maximize your retirement plan savings and personal savings.
Remember, with retirement plan investments, such as a 401(k) and IRA plans, the earlier you start saving, the more opportunity your account has to grow and accumulate in a tax-advantaged way (subject to certain limitations). Whatever your age, make the most of these savings opportunities now to give yourself the best chance to reap the benefits later.
Social Security benefits are not enough. While Social Security benefits account for 45% of the average retiree’s monthly income, the current average monthly Social Security benefit payment is just $1,227.10, and this amount may decline in the future as the ratio of workers paying into the system to retirees collecting benefits continues to fall.1
How much will you need? Create a savings strategy.
The first step in creating your retirement savings strategy is to estimate how much money you will need to maintain your standard of living in retirement. Be sure to look at your total financial picture and to take into account all of your assets, including money already in 401(k) and pension plans, individual savings, your spouse’s retirement plan accounts and projected Social Security benefits. Your financial advisor can help you assess all of these elements, plus potential risks (such as inflation), and estimate the appropriate savings goal for you.
Our resources can help you jumpstart your thinking, but working with a trusted financial advisor will help you identify what you’ll need and how to save for the retirement you envision.
1 Source: Social Security Administration. Monthly Statistical Snapshot, November 2015, www.ssa.gov
A brochure explaining the options available with a lump sum distribution. Compares cash distributions, leaving your money with your current employer's retirement plan, moving assets to your new employer's retirement plan, and moving assets from your current employer's plan to a Rollover IRA.
All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s webpage for specific details regarding investment objective, risks associated with hedge funds, alternative investments and other risks, performance and other important information. Review this information carefully before you make any investment decision.