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Your Financial Life
By Catherine Collinson / Jun 18, 2014

7 Tips for Retirement Readiness

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Preparing for retirement, or retirement readiness, can be daunting for many people. Given that people have unique circumstances and need, there’s no one size fits all approach to retirement planning. So it can be difficult to know what specific information is relevant for your personal situation. An example of unique circumstances is a persons’ life stage including current age, years away from retirement, and expectations about retirement. Recent research by the Transamerica Center for Retirement Studies® shows how retirement will likely differ across generations.

For example, Baby Boomers are more likely to be saving for retirement outside of work, and work during retirement. In addition, the Baby Boomers are more likely than other generations to expect to depend on Social Security as their primary source of retirement income.

Given the need for Americans to self-fund much of their retirement, Millennial and Generation X investors are generally starting to save earlier through their company’s 401(k) plans. The median age for opening a retirement account for Millennials is 22, more than a decade younger than when the average Baby Boomer began saving.

Some retirement readiness tips which are applicable to everyone, regardless of age, are:

Tips That Can Help Anyone Approaching Retirement

  1. Start saving early. The earlier you start saving, the longer you will have to realize compounded investment returns.
  2. Take a job that offers retirement benefits. Factor benefits into your total compensation. If your job does not offer retirement benefits, you may want to consider asking your employer to start a retirement plan or even switching to a different company.
  3. Contribute the maximum to your 401(k) plan that your company will match. If you don’t, you are giving up free money. Many companies match up to 5%. 
  4. Calculate how much you will need in retirement. Half of Americans have guessed their retirement income needs, instead of actually crunching the numbers. Transamerica offers a comprehensive Retirement Needs Calculator that anyone can access.
  5. Develop a retirement strategy. Write it down and be flexible. Revisit your strategy yearly to make sure you are still on track.
  6. Take advantage of Saver’s Credit. This credit grants special tax breaks to low- to moderate-income taxpayers who are saving for retirement. If eligible, make Catch-Up Contributions.
  7. Stay informed. If you rely on the expertise of a professional financial advisor, be sure to ask questions about your plan. If you manage your finances on your own, gain the knowledge to successfully guide your decisions. Above all, take advantage of the wealth of information available to you through the Internet.

Today’s workers estimate that they will need $1,000,000 saved for retirement. Without prudent planning and saving, this number will be hard to achieve. Use the tips above to help stay on track with your own personal retirement readiness.

Source: Transamerica Center for Retirement Studies, The Retirement Readiness of Three Unique Generations: Baby Boomers, Generation X, and Millennials, 15th Annual Transamerica Retirement Survey of Workers, 2014. 

The Transamerica Center for Retirement Studies® (TCRS) is a division of Transamerica InstituteSM, a nonprofit, private foundation. Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third parties. For more information about TCRS, please refer to www.transamericacenter.org.

TCRS1180-0514