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Six Key Retirement Planning Steps for Public Employees

05 Oct - Posted at 12:00h in Retirement Planning

The retirement planning process can be tricky. The average American spends roughly 20 years in retirement and many employees are unprepared or lack the funds to see them through. At Appreciation Financial, we specialize in helping teachers and other public employees plan for retirement. Follow these six key retirement planning steps to help you prepare for retirement:

1. Start early.

How you invest is as important as how much you invest. Starting early is the key to making sure you have enough money to carry you through retirement. Retirement funds generate wealth—it is important to give them enough time to earn the money you will need to retire comfortably.

So, start early, and stick with it.

2. Understand your needs in retirement.

Knowing how much you will need in retirement is very important. Your lifestyle may change, and your financial needs may grow. You may want to travel more, dine out more, and enjoy your retirement years. A good rule of thumb is $50,000 per year in retirement. Over the course of 20 years, that adds up to $1,000,000 in retirement savings needed.

You can use this retirement calculator to help you get a better understanding of your retirement needs.

Your employer's pension plan will likely not cover all of your needs in retirement. So you will want to see if you are able to invest in a defined-contribution retirement plan, like a 403(b).

3. See if you qualify for Social Security benefits.

Social Security can help supplement retirement income. Unfortunately, as a public sector employee, you may not qualify for Social Security benefits. For that reason, it is important to follow these steps in the process of planning your retirement. We want to make sure you have the means to enjoy your retirement to the fullest.

4. Begin saving, and do not deviate from your savings plan.

Contribute as much as you can to your defined contribution plan and your pension. It may be a little uncomfortable now, but it will be worth it in the long run. Have a monthly savings goal in mind and ensure sure you are meeting that goal.

5. Funnel extra money into an IRA.

If you have sudden influxes of cash from other investments or businesses, stash them away in an Individual Retirement Account (IRA). This is an easy way to generate retirement savings. The maximum annual contribution to an IRA is $6,000. If your IRA is growing at a rate of 7% and you are contributing the maximum amount annually, your IRA will be worth over $400,000 in 25 years.

You may want to look at the difference between a Roth IRA and a Traditional IRA, to help you decide which is best for you.

6. Do not touch your retirement savings.

This one is especially important. The most beneficial thing you can do to secure your retirement, is to leave your retirement savings alone. Do not borrow against your retirement and do not take money out early.

We understand that sometimes financial situations can become tight, and you may find yourself in a bind. Retirement savings may be your only option in an emergency. If that is the case, it is imperative that you put the money back into your savings account as quickly as possible.

Our financial professionals can assist you with the retirement planning process

Our financial professionals are standing by to help you navigate the ins and outs of the retirement planning process. The actions you take today will have an impact on your future. Don't wait—contact us now.

Photo by Glenn Carstens-Peters on Unsplash