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9 Tips to Help You Achieve a Financially Successful Retirement

With the right savings and investing strategy, a successful retirement is within reach. Here are some ideas to help you stay on track in achieving the retirement lifestyle you want:

  1. SAVE EARLY AND EARNESTLY
    The single most important thing you can do is save at least 15% of your annual income every year.
    • Contribute to your employer’s 401(k), 403(b) or 457 retirement plan. This is the best way to save the most. And with employer-matching contributions, growth is even faster.
    • Establish an Individual Retirement Account (IRA). This enables you to save on a tax-deferred basis — which is important, even if you aren’t eligible to deduct your contributions. If you qualify for a Roth IRA, the distributions are tax-free when you retire.
    • If you have access to a Roth 401(k) or qualify for a Roth IRA, the distributions are tax-free when you retire. Building both tax-deferred and tax-free sources of income — or being “income-tax diversified” — can give you greater flexibility and potentially lower your income taxes in retirement.
    • A SEP, SIMPLE or Individual 401(k) plan is a way for small business owners to save.
    • Don’t forget about taxable investment accounts to round out your savings.
    • Do the math to see whether your contributions add up to 15% of your gross annual income before taxes.
  2. DON’T OVERSPEND
    The less you spend, the more you can save and invest for growth. Know how you are spending your income and periodically review to make sure you know where you stand.
  3. BUILD AN EMERGENCY FUND
    Having a six-to-nine-month cash reserve equaling your total living expenses means not having to tap retirement savings and disrupting long-term goals if something unexpected happens.
  4. CATCH UP
    Being 50 or older allows you to contribute extra money to your IRA, 401(k), 403(b) and most 457 plans to boost savings.
  5. UNDERSTAND SOCIAL SECURITY AND PENSION BENEFITS
    Knowing your Social Security and pension payouts will clarify how much retirement income you need from your investments. And when you file for benefits can make a big difference.
  6. INVEST MORE OF WHAT YOU SAVE
    It may feel “safe” to keep your money in cash or CDs. However, a well-diversified portfolio may provide higher returns over the long term that can help you keep up with inflation.
  7. MAKE SAVING AUTOMATIC
    One way to do this is by “paying yourself first” — have a certain dollar amount taken out automatically from each paycheck and deposited into your retirement plan.
  8. PLAN FOR RETIREMENT HEALTHCARE COSTS
    Better lifestyles and healthcare mean most of us will live into our 80s, 90s and possibly beyond. But healthcare inflation and those extra years likely will add up to higher medical costs later in life.
  9. REVIEW YOUR GOALS ANNUALLY
    Smart investing for the long term takes time, thought and patience. Whether you invest independently, or work with an Advisor, review your changing needs and goals annually and refine your portfolio as needed, in order to stay on the path to the retirement you want.

Authors

KATHERINE ROY

KATHERINE ROY, CFP®

CHIEF RETIREMENT STRATEGIST, J.P. MORGAN

Being 50 or older allows you to contribute extra money to your IRA, 401(k), 403(b) and most 457 plans to boost savings.

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