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<March 2015>



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A 4-Step Checklist to Help Set and Achieve Your Retirement Goals


The best way to make the dream of a financially secure retirement come true is to plan for it as early in your career as possible. The 2014 Retirement Confidence Survey revealed that 36% of American workers have less than $1,000 in savings and investment for retirement. Additionally, only 44% have tried to calculate how much money they’ll need to save in order to live comfortably when they retire. No matter what your age, you can take charge of your retirement future now by taking time to define retirement goals and develop a plan to achieve them.

Here is a checklist to get started:

1.) Look Ahead
  • Envision where you want to live. While many people think of retiring to an area with a moderate climate, more leisure activities, or a lower cost of living, only 1.6% of retirees between the ages of 55 and 65 actually moved to a different state in 2010, according to an analysis of U.S. Census Bureau data by Richard Johnson, director of retirement policy research at The Urban Institute. Regardless of where you live during retirement, it is important to understand how the state tax policies will impact your retirement.

  • Anticipate your lifestyle. Consider how you want to spend time in retirement. Do you dream of traveling the world? Do you have plans to write a book? Will you work part time or volunteer in order to stay connected to the community?

  • Choose a target date. Determine an age at which you hope to retire. This will help you calculate an annual savings and/or investment amount that you will need to amass each year in order to achieve this goal. Generally speaking, this figure is often 80% of your current annual income; however, this varies for each person. For help determining your ideal retirement age, read this blog.
2.) Take Inventory of Assets and Maximize Savings
  • Understand your workplace retirement plans. There are two major types of retirement plans; defined benefit plans and defined contribution plans. A defined benefit plan such as a pension promises a specified monthly benefit at retirement. With a defined contribution plan like a 401(k), you and/or your employer make contributions to an individual account on a regular basis while you are employed. Understand the plans offered by your and your spouse’s employer to take full advantage of their benefits. Or create your own retirement plan if you are self-employed.

  • Evaluate IRAs. An Individual Retirement Account (IRA) allows you to save for retirement with tax-free growth or on a tax-deferred basis. If you have already established an IRA, make sure you are making the maximum contribution allowed and evaluate its performance two to three times per year.

  • Review life insurance coverage. Life insurance can help you maintain a comfortable lifestyle throughout retirement and can provide an income stream for your spouse upon your death.
3.) Anticipate Future Needs and Set Goals
  • Assess health insurance options. Over the past 20 years, the percentage of companies offering retiree health benefits has shrunk from 66% to about 35% according to CNN Money. Based on a national survey conducted in 2013, approximately 60% of workers delaying retirement point to health insurance as the reason they need to continue working. At age 65, retirees can apply for Medicare, but if you plan to retire sooner you will need to obtain your own health insurance. However, the Affordable Care Act may offer new options to early retirees.

  • Consider income sources. After analyzing your assets, consider how you will produce a steady stream of income from retirement accounts and personal savings. If you need an additional source of income, an annuity can be a good way to guarantee a steady stream of funds to cover fixed expenses. Consult with a financial advisor to determine how an annuity can supplement retirement income and which type is best for you.

  • Calculate how much money you need to retire. As a general rule of thumb, you will need 10 times your annual income for your retirement years. For example, if you make $100,000, then you should aim to have $1,000,000 in savings and investments. Our retirement calculators can help determine how much you need to fund your retirement and how long your savings will last.
4.) Develop a Plan
  • Be prepared. After establishing your retirement goals and evaluating your financial situation, it’s time to make a plan. Your plan should identify retirement goals and income needs, outline a strategy to grow your current assets and allocate investments, and determine your retirement income sources. The plan should incorporate benchmarks and milestones to help you stay on track. Remember to update your retirement plan as changes in the economy and your lifestyle dictate.
Many people like to meet with a financial advisor to create a retirement savings and income plan. For tips on choosing a financial advisor, watch this video.
Feel free to contact me with any questions about retirement planning at (973) 208-6214 or jbuonforte@lakelandbank.com.

*Securities are offered through Essex National Securities, LLC, member FINRA & SIPC. Insurance products are offered through Essex National Insurance Agency, Inc. Neither are affiliated with Lakeland Bank. Products are not guaranteed by the bank, not FDIC insured, not a deposit, not insured by any federal government agency, and may lose value including loss of principal.