Q:

How do you prepare for retirement?

A:

Quick Answer

According to the United States Department of Labor, creating and sticking to a plan to save money is the most important step in preparing for retirement. Successful retirement requires planning, commitment and stable finances.

Know More
How do you prepare for retirement?
Credit: Tara Moore Taxi Getty Images

Full Answer

According to the United States Department of Labor, retirees need at least 70 percent of their pre-retirement income to maintain their standard of living after they stop working. Putting a set amount of money into a savings account each month is an effective way to start saving for retirement. The Department of Labor strongly advises workers to leave their retirement savings untouched until they retire; withdrawing the money early can cause a loss of interest or tax benefits.

Money can be put into an Individual Retirement Account, or IRA, which can provide an easy way to save for retirement. If an employer has a retirement savings plan, such as a 401(k) plan, an employee may want to sign up and contribute to it as much as possible. Compound interest and tax deferrals can cause money to accumulate over time. Each plan is different, so a potential retiree may ask his employer for details before signing up. An employee may also ask about an employer's pension plan. A retiree also has access to Social Security benefits, which are on average 40 percent of what was he earned before retiring.

Sources:

  1. dol.gov

Is this answer helpful?

Similar Questions

  • Q:

    How do you plan for retirement?

    A:

    Plan for your retirement with regular savings that take advantage of deferred taxes and employer contributions, states CNN Money. You need to ensure that the returns beat inflation and avoid touching your retirement funds until your actually retire, advises the Department of Labor.

    Full Answer >
    Filed Under:
  • Q:

    What is a 403(b) retirement plan?

    A:

    The U.S. Internal Revenue Service describes 403(b) retirement plans as plans that allow an employee to defer a percentage of his pre-tax income into an account where taxes remain deferred until distribution. These plans work similarly to the 401(k) plans offered by for-profit organizations, but 403(b) plans are only available to employees of public education systems, churches and tax-exempt charities and non-profits.

    Full Answer >
    Filed Under:
  • Q:

    How much should you save for retirement?

    A:

    One approach is to save 10 to 15 percent of each paycheck for retirement. Fidelity suggests aiming to have eight times your annual income in an account by retirement age.

    Full Answer >
    Filed Under:
  • Q:

    What is the retirement age?

    A:

    According to the Social Security Administration, the full retirement age is 65. This is called the "normal retirement age," and is the age at which full retirement benefits become available.

    Full Answer >
    Filed Under:

Explore