Now that you have a clearer picture of your retirement goal, it’s time to estimate how large your retirement nest egg needs to be and how much you need to save each paycheck to reach that goal.
An easy rule of thumb is that you’ll need to replace about 70–85 percent of your pre-retirement income1, but where do you begin? A retirement savings calculator can help give you an idea about how to reach your savings goal. Calculate how much money you should be saving for retirement.
1Source: March 1, 2016 — http://www.gao.gov/products/GAO-16-242
A retirement calculator can help provide a personalized snapshot of what your financial future might look like. Take a few minutes to answer questions about your household status, salary and retirement savings, and this tool can help you determine if you are on track to retire when — and how — you want.
By raising your per-paycheck contributions, you increase your potential to save. Use this calculator to see how additional contributions to your retirement plan can add up over time.
Catch-up contributions let you save more tax-deferred money for retirement, beyond the normal maximum contribution limit for the year. It’s never too late to start planning and saving for retirement. Even if you’re over 50, you may be eligible to make an age 50 or over catch-up contribution to help you make up for lost time.
Your employer also may be making contributions to your plan! If your employer is matching all or some of your contributions to the retirement savings plan, when you combine this match with the amount of your contribution, plus any tax-deferred earnings your account may accumulate, you have multiple engines of potential growth that can enhance your financial security in retirement.
If you’re about to change jobs, you have different options available to you to manage your retirement plan.
Anything you contribute — including rollover contributions and any earnings on that money — is always 100% vested. Your employer’s contributions may be subject to a vesting schedule, check with your employer for the specific vesting schedule for your plan.
When to take distributions from your employer-sponsored retirement savings plan is up to you, but required minimum distributions (RMDs) must be taken each year beginning with the year you turn age 70 ½. Educate yourself before you make one of the most important financial decisions of your life.
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