Birthdays represent a time for each of us to celebrate, but they’re also a great time to reflect on what is most important in your life. This includes setting new goals and dreams that make you financially secure. Think of your birthday as a time to re-examine your priorities and position yourself for a future in retirement! Each generation has a few key considerations in planning and saving during this great adventure we call life (and life after work).
The Millennials (currently age 19-35)
Utilize a Roth 401(k) or Roth IRA — The younger you start saving, the more valuable your Roth contributions can be. Contributions are going in taxable, so they can be withdrawn tax-free as long as you wait until after age 59½ and you have held the account for at least 5 years.
- Calculator: Roth vs. Traditional 401(k)
Participate in Your Company-Sponsored Retirement Plan and SAVE — As a Millennial, you have so much time on your side to grow your savings. Equities do bring risk, but with decades to go until retirement, you have the means to ride out any market volatility. Aim to put 15% of your income, including company match and profit sharing contributions, towards retirement.
- Upon Employment: Get started and Aim for 15% savings
- Age 35: Goal of 1X annual salary should be saved
Generation X (Currently age 36-51)
How Are You Slicing the Savings Pie? — Re-evaluate how much you are setting aside for your needs and goals, such as a child’s college education, and what you are saving for retirement. It can be tough, but it’s important to continue putting 15% of your income, including company match and profit sharing, towards retirement.
- Calculator: 401(k) Savings Calculator
Don’t Get Too Conservative — Since you still have many years left to work, you can still afford to allocate a majority of your portfolio to equities. After age 50 you may consider shifting a small portion of your portfolio to fixed income and shorter term investments. During your fifties, consider maximizing your retirement savings by taking advantage of catch-up contributions, which help you save even more as retirement draws nearer. (2016 catch-up contributions up to $6,000 if over the age of 50)
- Calculator: Asset Allocation Calculator
- Checkpoint at age 40: Goal of 2X annually salary should be saved
Baby Boomers (currently age 52-70)
Important Questions to Answer — As you near retirement age it is important to consider the following:
- How much do you need to maintain your lifestyle in retirement?
- What will your budget look like in retirement?
- When will you take Social Security?
Review your asset allocation, and shift your focus to preserving wealth utilizing more fixed income and short term investments.
Do Some Homework — These tools will help:
- Budgeting Worksheet
- Calculator: How long will my retirement savings last?
- Calculator: Social Security Estimator
No matter what your age — 20, 35, 50, or 70 — you should always revisit, review and reposition yourself for a financially fit retirement. These principals hold true for each generation and stage in life. Taking the steps now will help to keep you on track for the BIG BIRTHDAY…your Retirement!
Currently there are:
- 75 million Millennials
- 66 million Generation X
- 75 million Baby Boomers
Want to know more? Check out the our Retirement Education Center