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Vegas Chamber 401K Plan - National Retirement
National Retirement Security Week begins October 17. It is a week to bring awareness to the importance of saving for retirement. We may all have different reasons why saving for retirement is important. A little knowledge and some effort may yield a significant difference. Consider the following:
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Compounding. The longer investments have time in the market, the greater the savings potential to double, triple, or quadruple. For instance, assume a 7.2% return of a 27-year-old and a 47-yearold, contributing $300 every month. At 67, the 27-year-old would have contributed $144,000, and investments would have grown to $833,081. The 47-year-old would have contributed $72,000, and investments would have grown to $160,128. A monthly retirement savings budget can become more expensive the closer to retirement age.
Freedom. Many Americans are forced to work past full retirement age due to a lack of savings and existing debt. It would be favorable to continue to work by choice with a little planning and increase savings. Consider the freedom and fulfillment with volunteering, starting a small business, spending time with family, or traveling.
Maintain lifestyle. It is essential to save more than ten times annual income and eliminate all debt before retiring; include no revolving credit card debt, student loans, car payments, and mortgage. Consider making extra payments on your home to ensure the house is paid for before retirement.
Accessibility. The loss of a job or a medical emergency can cripple a savings goal. It may be better to file bankruptcy before taping into a retirement account. However, most retirement plans may allow a loan without penalty. Loans may include 50% of the account balance, not to exceed $50,000 or whichever is lower. Interest is paid back to the borrower over five years or longer if the loan is used for a down payment on a primary residence. ¹
Financial confidence. Our physical health is essential, but so is our mental health. Funding a retirement savings program may help reduce financial stress. A study released by the Global Financial Literacy Excellence Center in April of 2021 polled 10,000 Americans before the pandemic. ² It revealed only 30% were not financially stressed. The study also linked financial stress due to a lack of financial literacy.
In summary, be intentional, work with a financial advisor, and create a savings goal that inspires you to save more, spend less, and avoid debt. You can do it.
To learn more about this topic or the Chamber’s Association Retirement Plan and how employers may gain access, visit groupretire.com or contact Joe Caldera at 702.846.4015.
Joe Caldera is an LPL Financial Advisor, Chartered Retirement Plan Specialist®, and principal at Caldera Wealth Management Group. CRPS conferred by The College for Financial Planning.
