Have you heard of “Bag Lady Syndrome?” It is very common for women. This means that no matter how financially stable you are, you are afraid of ending up as a bag lady. Instead of feeding that financial insecurity, challenge yourself to overcome that hurdle and allay your retirement fears.
The first thing you need to do is get the facts. Find out exactly how much you have saved for your retirement. Most of this will be in tax-deferred accounts such as 401(k)s and 403(b)s, IRAs, annuities, life insurance policies, and annuities. You can also look at other savings but you want to keep your retirement savings separate from your taxable savings and investments. This is a very important exercise in itself. Not many of us keep track of our investments and being organized and seeing all your assets in one place can be very rewarding.
After you get all the numbers and paperwork together, you need to confirm that you’re on the right path to saving for a successful retirement. This takes into account your current income, how much you’ve already saved, and when you’d like to retire. Take this information and plug it into an online calculator. There are many to choose from: http://www.kiplinger.com And http://www.smartmoney.com.
What you want to know is how much you should save on a yearly basis (or monthly, just divide by 12). For example, after entering your numbers, you read that you need to save $15,000 annually to reach your retirement goal. At first, this number may seem overwhelming but there are a few points to keep in mind. You’re probably already saving a good chunk of that with your 401(k). And if your employer matches, that’s extra money you may not have considered. Plus, if you’re contributing to an IRA, that’s extra money, too. It is essential not to overreact but instead to come up with a plan. If you are saving much less than you should be, consider the following options:
o Reconsider your retirement date. Run the numbers with a later retirement date.
o Reconsider the annual income on which you would like to live. Run the numbers with that lower number.
o Increase your annual savings by 5% each year until you reach your goal. This is a manageable number that you won’t feel. You won’t get there right away but at least you’re moving in the right direction.
The important thing to remember is that you have found out the facts about how much you have saved and how much you need to keep saving. Most people do not face their numbers and thus spend many hours worrying about their future. Armed with your information and how to move forward for a successful retirement!