Find out how to save for retirement and get closer to your retirement goals.
Many of us may have seen our retirement savings eroded recently, and retirement may feel that much farther away. When conditions are difficult, you want to find ways to save that feel secure - and offer upside potential. Bottom line, it is more important than ever to continue to save, or start if you have not.
Saving early pays off
If you start saving early, a small amount can make a big difference. Assume you start saving $3,000 per year at age 50, with an 8% return. At age 65 you'll have nearly $100,000. If you start saving the same $3,000 amount (at the same 8% return) at age 35 instead of at age 50, you'll have saved nearly $400,000 by age 651. That's four times as much. It pays to start early.
People are enjoying longer and longer retirements, so you need to ensure you'll have enough to enjoy your future. Saving in taxed deferred vehicles is a smart place to start because your savings can grow faster if you don't pay tax as the money is growing. Consider the benefits of the following savings investment vehicles:
A 401(k) plan is a tax-deferred investment vehicle specifically designed for retirement. You only pay taxes on contributions and earnings when the money is withdrawn. Your employer's specific 401(k) plan will allow you to contribute up to a certain percentage of your before-tax pay; as of 2013, the maximum dollar amount the law allows an employee to contribute from before-tax pay is $17,500.
A 403(b) plan is only available to employees of certain non-profit tax-exempt organizations: 501c(3) Corps, including colleges, universities, schools and hospitals. As with a 401(k) plan, all contributions and earnings to your 403(b) are tax deferred and many employers provide matching contributions to your 403(b) account which can range from 0% to 100% of your contributions.
Individual Retirement Account (IRA)
IRAs are one of the easiest, most convenient ways to meet your retirement goals. Like employer-sponsored retirement savings accounts such as 401(k)s, the money you save in an IRA grows tax-deferred and becomes available to you without federal tax penalties when you turn 59½.
Deferred annuities can be a great choice for building a tax-deferred2 retirement savings especially if you want to save more than you might with IRAs and 401(k) plans. With a deferred annuity, you have the option to convert your annuity balance into an income stream which can generate income for the rest of your life.
If you've just started to save for retirement, you may relate to Tom's story4.
Tom is married and has been working for nearly 10 years. He just started to plan for retirement and contributes regularly to his 401(k). Although Tom is far from retiring, he feels uncertain about relying on traditional sources, such as Social Security or a pension, for retirement income. He also knows that he and his wife may experience a retirement spanning 30 years or more.
Tom's solution: Make small ongoing contributions to a deferred income annuity. When Tom is ready to receive income payments, he can choose from several different payment options such as Lifelong Income for Two. The Income for Two payment option could provide payments for Tom and his wife as long as either of them is alive.
Whether you save inside a tax-deferred account or outside of one, there are many different types of products that you can use to invest your savings, such as CDs, savings or money market accounts. Here are a couple more:
Mutual funds pool the money of many people and invest it in a portfolio of stocks, bonds, and/or money market instruments to meet specific investment objectives. As an investor, you receive shares of the mutual fund in exchange for your investment dollars.
Think of your retirement savings as one big paycheck that may have to stretch out over a period of 30 years or more. If Social Security, your pension, and savings won't generate enough income to cover expenses for your lifetime, you may need other retirement income sources.
With more growth potential in return for a higher level of risk, variable annuities5 can offer investment choice and flexibility through a variety of professionally-managed investment portfolios. These portfolios generally include stock and bond portfolios, ranging from conservative to aggressive risk levels. The value of a variable annuity will fluctuate, depending on how the investment options perform.
MetLife's Disability Income Insurance and Life Insurance products offer guaranteed4 benefits that can help you protect your savings and future income.
If you were unable to work due to an unexpected illness or accident, then disability income insurance can be a way to replace a portion of your income and help you continue to save for retirement while maintaining your standard of living.
Having a life insurance policy in place can help provide guaranteed4 income for your loved ones and lessen their financial burden when you're no longer here. The money can help with everything from mortgage payments to college tuition.
Can you help ensure that you'll have enough money saved when you retire? If you start now, you will. Learn more.
Not sure where to start? We can help. If you’re thinking about your future, we’ll give you the tools that can help protect and maximize your retirement income.
Want to know more about Retirement Income?
1 Assumptions: Contribution is made at the beginning of each year, 8% effective yield, no withdrawals. This hypothetical example is for illustrative purposes only and does not describe any particular financial product or MetLife product and does not account for taxes or inflation.
2 If you are buying an annuity to fund a qualified retirement plan or IRA, you should do so for the annuity’s features and benefits other than tax deferral. That’s because tax deferral is not an additional benefit of the annuity. References throughout this material to tax advantages, such as tax deferral and tax-free transfers, are subject to this consideration.
3 Guarantees apply to certain insurance and annuity products (not securities, variable or investment advisory products) and are subject to product terms, exclusions and limitations and the insurer's claims-paying ability and financial strength.
4 This example is hypothetical and for illustrative purposes only. It does not represent any particular investment in a MetLife product or a guarantee of any kind.
5 A variable annuity is a long-term investment designed for retirement purposes. In essence, a variable annuity is a contractual agreement in which payment(s) is/are made to an insurance company, which agrees to pay out an income or a lump sum amount at a later date. There are contract limitations, fees, and charges associated with variable annuities, which include, but are not limited to, mortality and expense risk charges, sales and withdrawal charges, administrative fees, and charges for optional benefits. Early withdrawals may be subject to surrender charges, and taxed as ordinary income and, in addition, if taken prior to age 59½, an additional 10% federal income tax penalty may apply. Withdrawals reduce annuity contract benefits and values. Investments in variable annuities will fluctuate and values upon redemption may be less than the original amount invested. Variable annuities are not guaranteed by FDIC or any other government agency and are not deposits or other obligations of, or guaranteed or endorsed by, any bank or savings association.
Variable annuities and mutual funds are offered by prospectus only, which is available from your Registered representative. You should carefully consider the product's features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well as other information about the underlying funding choices. This and other information is available in the prospectus, which you should read carefully before investing. Product availability and features may vary by state.
The amounts allocated to the variable investment options of a variable annuity's account balance are subject to market fluctuations so that, when withdrawn or annuitized they may be worth more or less than their original value.
Like most insurance policies, MetLife’s policies contain certain exclusions, waiting periods, reductions, limitations and terms for keeping them in force. Ask your representative about costs and complete details.
Metropolitan Life Insurance Company (MLIC), 200 Park Avenue, New York, NY 10166. Securities products offered by MetLife Securities, Inc. (MSI) (members FINRA/SIPC), 1095 Avenue of the Americas, New York, NY 10036. MLIC and MSI are MetLife companies.