To maintain your current lifestyle in retirement, your retirement income will need to be about 70% to 80% of your pre-retirement income, some financial planning experts say. But that's just one rule of thumb. You will need a higher percentage if you plan to add significant expenses, such as travel. You may even need a higher income in retirement than you had before you re🐻tired, depending 🅷on your desired lifestyle.

, CFP®, founder and CEO of Financial Plan in Bellingham, Washington, says the 70% to 80% rule might not be enough for some people. "[M]any will find that they are not happy with th🥂at level of income," he said. "Consider that, although it is easy to increase spending, it is quite another to reduce it. Retirees who take a 20% to 30% cut in pay will feel it in a reduced lifestyle."

Building up your savings requires careful planning, which includes assessing your current assets, the number of years left until you retire, and how much you'll be able to save during your pre-retirement years. In this article, we list some of the steps to take when implementing 澳洲幸运5官方开奖结果体彩网:your retirement program.

Determine What You Need

One popular approach to retirement planning starts with 澳洲幸运5官方开奖结果体彩网:determining how much you'll need to finance your retirement years.

This is usually based on projected 澳洲幸运5官方开奖结果体彩网:cost-of-living increases, the number of years you're likely to spend in retirement, and the lifestyle you plan to lead during retirement. But projecting an amount isn't an exact science. The years you spend in retirement may be more or less than your project, and the same may 🔯go for cost-of-living increases.

However, a comprehensive outlook and some thought will help to 澳洲幸运5官方开奖结果体彩网:provide realistic projections. Here are some factors to consider:

• Your projected everyday living expenses
• Your 澳洲幸运5官方开奖结果体彩网:life expectancy
• Your projected costs
• Your resources (other than your retirement savings) that can cover unplanned expenses (e.g. 澳洲幸运5官方开奖结果体彩网:long-term care insurance, annuity products, and health insurance)
• Your real estate (if you own your home, have no outstanding mortgage balance, or will own your home by the time you retire—you have the option of selling it or obtaining income through a 澳洲幸运5官方开奖结果体彩网:reverse mortgage)
• Your intended lifestyle during retirement, including whether you plan to lead a quiet retirement or engage in pricier activities, like 澳洲幸运5官方开奖结果体彩网:traveling around the world

Take Stock of What You Have

"Planning for retirement is like planning for a trip. It is easier to plan for the journey if you know your starting point," says Russ Blahetka, CFP®, a financial planner in Schererville, Indiana. "While gaining insight on 澳洲幸运5官方开♍奖结果𝓰体彩网:how clients see their retirement lifestyle is important, knowing their current financial status is [a key] part of the process. It helps determine the ongoin♓g strategy for saving and protection.🤪"

If you're not a financial planning expert or don't have the time necessary to implement and manage a retirement program, you may need the 澳洲幸运5官方开奖结꧒果体彩网:help o🥂f a competent financial planner.

Start Saving

Once you have factored in the above considerations, it's necessary to determine how much you will need to 澳洲幸运5官方开奖结果体彩网:save on your own.

"[S]tart setting aside some money each month. A good goal is 10% of your monthly income. It may take years to achieve that goal, but any amount of savings is better than none," said ., designer of the 7Twelve Portfolio in Springville, Utah.

A complete retirement income package has been traditionally referred to as a "澳洲幸运5官方开奖结果体彩网:three-legged stool," comprising of 澳洲幸运5官方开奖结果体彩网:Social Security, employer-sponsored retirement plans (it was previously pensions), and your personal savings.

Your next consideration is the type of savings vehicle you will use for your personal savings. The amount varies depending on whether your means of savings are in pre-tax or 澳洲幸运5官方开奖结果体彩网:after-tax accounts, or a combination thereof. The type of savings account you choose depends on—among other things—whether it is better for you to pay tax on your savings before or aftꦆer retirement.

Tax Benefits for Retirement Accounts

Saving in a tax-deferred vehicle, such as a 澳洲幸运5官方开奖结果体彩网:traditional IRA or a traditional 澳洲幸运5官方开奖结果体彩网:401(k) plan, may reduce your current taxable income. If you have a 401(k), your taxable income is reduced by what income you defer to the plan, and if you have a traditional IRA, you may be able to claim your contributions as a tax deduction.

Earnings in such vehicles also accrue on a tax-deferred basis, but the assets are taxed when you distribute or withdraw them from the retirement account. You may pay less in income taxes on amounts saved on a pre-tax basis if you make withdrawals during retirement and your income tax rate is lower than it was in your pre-retirement years.

By using after-tax funds to save for retirement (as with a 澳洲幸运5官方开奖结果体彩网:Roth account), you won't havไe to pay taxes again when you withdraw them during retirement, as long as it's been five years since you first contributed to the account.

"[I]t’s nice to have some diversification of your tax bill in retirement so that every account withdrawal doesn’t get taxed at regular income tax rates," said Kristi Sullivan, CFP® of Sullivan Financial Planning in Denver, Colorado.

Contribution Limits for Retirement Accounts

The 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) has established limits as to how much can be contributed to an IRA each year. The contribution limit for a traditional and Roth IRA is $7,000 for 2024 (it was $6,500 for 2023). Individuals age 50 or older can deposit a 澳洲幸运5官方开奖结果体彩网:catch-up contribution in the amount of $1,000 each year.

The contribution limit for employees enrolled in a 401(k) in 2023 is $23,000 in 2024 (it was $22,500 in 2023). Those who are age 50 or older can contribute a catch-up contribution of $7,500 in 2023 and 2024.

Distinguish Wants From Needs

It's one thing to figure out how much you need during retirement, how much you need to save, and what account you will use to do so. However, the primary challenge is finding the extra funds to put toward savings, especially if your budget is already spread thin.⛎ For many, this means changing spending habits, re-budgeting, and redefining needs꧒ vs. wants.

“Separating your personal budget between 澳洲幸运5官方开奖结果体彩网:discretionary and non-discretionary spending helps create a baseline in terms of what you need versus what you want," said , founder and president of Index Fund Advisors in Irvine, California, and author of "Index Funds: The 12-Step Recove♛ry Program for Active Investors."

"Seeing the life you want to live in detail," Hebner added, "can incentivize you to save more in order to live that life."

Invest

Once you are able to allocate a part of your monthly income to your savings, you need to think about investing those amounts. Investing puts your money to work for you and usually gives you the 澳洲幸运5官方开奖结果体彩网:benefits of compound interest. Investing is integral to ensuring your retirement program meets your goals. And 澳洲幸运5官方开奖结果体彩网:the earlier you start, the easier it will be for you to do so.

"Automate your saving and investing–that way, it happens without you having to remember, and the minimum needed to open a mutual fund is often lower if you automate your investments," Israelsen added. "And ... don’t over-manage your investments. When some of your mutual funds are not performing well, be patient and invest more. Buying low, being consistent, and exercising patience are the hallmarks of successful long-term investors."

The types of investments that are suitable for your portfolio will depend primarily on your 澳洲幸运5官方开奖结果体彩网:risk tolerance. Generally, the closer you are to your targete🐼d retirement date, the lower your risk tolerance. The idea is that those who have a long time until retirement have more opportunities to recoup any losses tꩵhat may occur on investments.

澳洲幸运5官方开奖结果体彩网:People in their early 20s may have a portfolio that includes more high-risk investments such as stocks. People in their 60s, on the other hand, will have a higher concentration of 澳洲幸运5官方开奖结果体彩网:investment🌟s with guaranteed rates of return, such as 澳洲幸运5官方开奖结果体彩网:certificates of deposit or 澳洲幸运5官方开奖结果体彩网:government securities.

Regardless of risk tolerance, it's important to achieve an appropriately 澳洲幸运5官方开奖结果体彩网:diversified 澳洲幸运5官方开奖结果体彩网:portfolio, one that maximizes return for its determined risk.

The Bottom Line

This article discusses some of the fundamental groundwork for ensuring that your retirement program is successful—but this is only an overview. The underlying details will take time and effort for you to determine and execute. Consider reaching out to a financial planner, who should be able to help ensure that 澳洲幸运5官方开奖结果体彩网:all of the import🐭ant factors 🍒are considered.