Americans want to boost their retirement-readiness, and financial professionals, including my organization, Lincoln Financial, are committed to motivating people to take the first step towards that goal. People face many financial challenges when it comes to saving for retirement. The different approaches people take should be based on each approach's alignment to their natural mindsets and behaviors.
When saving for retirement, I define optimism as hope, strengthened by the belief that you have the ability to make things happen that move you forward. I also believe that when you focus on your specific situation, and make sure the advice you seek and the steps you follow serve your unique reality, even as that reality changes over time, you're on the right track toward achieving your goals.
Whether you like to do it yourself, rely on automated features and models, seek input from a variety of sources before making a move, or a combination of those, you need a strategy that helps you save enough to get to and through retirement.
An employer-sponsored retirement plan is still the primary, and often the only, option people rely on to save for retirement. Hopefully, your employer offers a retirement savings plan at work, and matches some portion of the contributions you make every pay period.
If you don't have access to an employer-sponsored retirement plan, there are other savings options like individual retirement accounts or the myRA, a new type of retirement account that acts as a starter for lower and middle-income individuals. Whatever the vehicle, it's important to choose solutions that are well-matched with your retirement savings goals.
Mindful of the growing need for personal retirement savings to supplement Social Security and other sources of income in retirement, industry leaders are expanding their offerings to include solutions designed to bolster contribution rates and foster long-term success.
Retirement plan providers and employers now offer automatic features, including automatic enrollment, deferral and contribution-rate escalation, to streamline the savings process and enhance retirement outcomes for savers.
Savers can also consider new investment options in retirement plans that offer growth potential coupled with guaranteed minimum withdrawal benefits to help protect assets in down markets and provide access to cash in case of an emergency. It's important to ask your financial professional or plan provider what solutions are available and serve your purpose.
I encourage you to consider these actions to help you boost your retirement readiness:
1. If you haven't started saving, begin now. If you're not enrolled in your plan, enroll today. Participating in an employer-sponsored retirement plan can help reduce your taxable income and build your savings at the same time. Contact your benefits administrator or human resources department to find out how to get started. If your employer doesn't offer a plan, look into saving in an IRA.
2. Save at least up to the company match. Many employers will match your contributions up to a certain percentage. Take advantage of these offers and try to save at a higher percentage as your income increases. When you don't take advantage of a company match, you're leaving money on the table. If you hit the maximum contribution limit in your plan, a financial professional can help you find the right vehicle for your additional savings.
3. Make more and save more. When you receive extra cash from a salary increase, a bonus or some other unexpected surprise, consider saving a portion of those income boosts and increase your employer-sponsored retirement plan contribution rate.
4. Review your savings goals with a financial professional. Schedule a retirement plan checkup at least once a year to make sure your savings and investments are in line with your personal retirement savings goals. A good way to remember is to plan your checkup around your birthday or an anniversary. A financial professional can help you get on track and stay on track with your savings goals.
5. Resist the temptation to borrow or take money out of your plan. Unexpected events may tempt you to consider borrowing from your retirement plan savings or take money out altogether. This is especially true during a down market. Resist the temptation. When you borrow against your plan, you may miss out on potential market gains. If you take money out of your plan, consider all of the tax implications and potential costs before making a decision.
Chuck Cornelio is President of Retirement Plan Services for Lincoln Financial Group and is responsible for the firm's employer-sponsored retirement plans business. Cornelio also serves as the company's Chief Administrative Officer and oversees the enterprise-wide Shared Services and Information Technology functions. Cornelio made 401k Wire's list of "Most Influential People" in the industry in 2013. He was also a founding member of the SPARK Institute and a former Governing Board Member.
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