How to Start Saving for Retirement

Most
Americans expect to retire at age 66, according to a 2018 Gallup poll. But the
reality is more like 61, and it has been for the past eight years. Many people
are facing early retirement due to unforeseen circumstances, including
fluctuating markets.

This simply means it’s more important than ever to start planning today for what tomorrow brings. It’s never too early, or too late, to start planning for the future. The right financial planning will get you on the right path to retiring happily and comfortably.

Here
are a few basic questions you should ask when saving for retirement:

How Much Should I Be
Saving for Retirement?

Most
financial planners recommend saving between 10 and 20 percent of your pre-tax
annual income. While this might seem high, keep in mind that you may already be
saving part of that percentage through contributions to an employer-sponsored 401(k)
or IRA; so if you’re withholding 10 percent from your paycheck, you could be
fine increasing your savings by 5 to 10 percent more.

When Should I Start
Saving?

The truth is you should start saving as early as possible. Investing a smaller amount over a longer period of time typically yields better results than investing larger amounts over a shorter time frame. That’s because the money you invest today generates earnings through compound interest. Those earnings can then be reinvested over time, producing additional dividends. 

How Much Do I Need to
Retire With?

According
to the AARP, a good rule of thumb is to aim for a nest egg of somewhere between
$1 million and $1.5 million. For many people, that’s approximately 10 to 12
times their annual income.

Of
course, this amount varies depending on factors like what your retirement goals
are, where you plan to live, and how healthy you are. Try to estimate your future
cost of living.  Then consider how long
you expect to be retired. For couples that retire at age 65 today, there is a
43 percent chance that at least one of them will live into their early 90s, so
plan accordingly.

What Insurance
Coverage Do I Need?

The ultimate goal is a happy and comfortable retirement, and having the right insurance coverage in place to protect you is essential, especially for planning for a time when you’re not earning income anymore. A 360 Review with your Texas Farm Bureau Insurance Agent can help you ensure that you’re on the right path.

“We
review everything including your auto, home, and life insurance and ask about
your finances,” says Nathan Aviles, a Texas Farm Bureau Insurance Agent in
Blanco County. “The reason we do all that is because in order to protect our
members properly, we have to know exactly what we are protecting.”

Your Agent can also help you set up an annuity plan, which provides tax-deferred savings for retirement income. Call your Texas Farm Bureau Insurance Agent to discuss your retirement plan and make sure you have the coverage you need for the road ahead.

While you’re looking at your savings, find out how to better manage your money by completing this DIY financial audit.

Coverage
and discounts are subject to qualifications and policy terms and may vary by
situation.