|By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Insurance Division
National Retirement Security month is a campaign to remind us of the importance of saving for retirement. Americans face significant obstacles when it comes to having enough money to last them through their golden years. We can no longer survive on social security alone, and life expectancies and inflation must also be considered when determining how much money to save. Not only do we need more money to retire, we need to go back to the basics and start preparing for retirement! A survey was done in July 2019, which was funded by a grant from the Investor Protection Trust (IPT) in collaboration with the Iowa Insurance Division, revealed that 49 percent of Iowans do not feel they are adequately planning or financially prepared for their retirement.
Don’t let this statistic discourage you. It’s never too early and it’s never too late to start planning for retirement. All Iowans can adequately plan and be financially prepared for retirement, and here are a few ways to start.
- National Savings Day is October 12th. Just starting to save or invest something is a beginning and allows you to take advantage of compounding, where interest is paid on the existing principal amount as well as interest already earned, thus your money grows faster!
- Talk to your employer. Does your employer have a sponsored retirement plan such as a 401(k), 403(b), or 457(b) plan? If you don’t know, ask your human resources person and get signed up. Ask if your employer has matching contributions. Contributing enough to take advantage of this match means free money! Also, there may be tax advantages for signing up for your retirement plan at work.
- If you do not have access to an employer-sponsored plan, and even if you do, consider an Individual Retirement Account (IRA) available in two options: Traditional and Roth. You may wish to speak to a licensed investment professional to determine the best option for you since both options have different tax advantages and contribution limits based on your age. If you are a small business owner, sole proprietor, or in a partnership, you may want to look into whether a Simple IRA or a SEP (Simplified Employee Pension)may be beneficial.
- Make automatic contributions to savings, investments, employer-sponsored plans, IRAs, etc. and let them do the work for you.
These are just some ideas to help you begin thinking about retirement and securing your financial future. Don’t wait. Start on your financially secure retirement journey today!