Are You Maximizing Your Retirement Savings?

Thinking about retirement and your financial future can be overwhelming. Following the guidance below will reduce the stress that often accompanies this life-changing event.

Planning Ahead

• Planning for retirement is the key to your financial future.
• Prioritizing good saving habits can keep you consistent in your financial growth.
• Using a 403(b) or a 457(b) savings plan allows you to make tax-deferred contributions or accumulate tax-free growth.
• Never underestimate the power of compound interest.

As an administrator, you’re in a constant state of planning. From the day-to-day operations to long-term strategic planning for your district, you know how important it is to anticipate the road ahead and be prepared for what happens.

The same can be said for your career and, more specifically, your retirement.

Calculating Your Future Financial Needs

When it comes to your finances in retirement, there are two things you need to know:

• The total savings you may need by the time you want to retire
• How much you should be saving to get there

We have a Financial Planning Expense Worksheet that can assist you in calculating your monthly budget. This will determine how much you are currently spending and saving.

Making the Most of Your Tax-Deferred Options

Employer-sponsored retirement plans, such as a 403(b) and 457(b), are an excellent savings option. With these options, your savings can be tax-deferred (pre-tax) or after-tax (Roth).

Tips on Saving for Retirement

Like any goal, good habits are the foundation of a solid, long-term plan. Consider these tips for a financially healthy retirement:

• Start now – When it comes to saving for retirement, time is both on your side and extremely critical. Don’t wait. Start today.
• Start small – When it comes to getting started, any amount of money is better than doing nothing. Money may feel tight, but even a few dollars now can make a big difference over a long period of time. 
• Make saving automatic – Use payroll deductions from your paycheck or your checking account. If it’s automatic, you’ll never forget to do it.  
• Save regularly – Just like brushing your teeth, make saving for retirement a regular habit.
• Be realistic – Financial growth is a marathon, not a sprint. Don’t celebrate early gains or let short-term losses deter you. You’re playing the long game for financial success. 
• Don’t dip – It may be tempting to pull funds from your retirement savings when you get in a pinch, but try to refrain from accessing these funds. It can cost you in the long run.  

Playing Catch-Up

A 403(b) and 457(b) retirement plan allows you to play catch-up. The maximum you can contribute to these plans is $23,000 a year. If you’re over age 50, you can make catch-up contributions of an additional $7,500 every year.

Eliminating Additional Tax

Finally, remember to review your contract to include your sick and vacation day pay as an employer contribution into your 403 (b). This will allow you to save more by eliminating the FICA expense and increasing the total contribution limits.

If you would like to schedule a consultation to discuss the different retirement plans and how they can support your retirement income strategy, or if you need a copy of the Financial Planning Expense Worksheet, email Ginger Thompson at gingert@njasa.net.