Contributing to a supplemental retirement savings plan is a great way for you to expand your income in retirement. If you haven’t enrolled into your employer’s program, here’s four reasons why you should consider taking action now!
You Can Live Comfortably in Retirement
Data shows that individuals will likely need 80% of their current income to keep up with their lifestyle in retirement. Even if you can only afford to contribute a minimal amount, put your money to work for you. Additionally, thanks to longer life expectancies, your retirement years may span 20 to 30 years. That’s a much longer period you’ll need to finance than previous generations, so the sooner you start saving the more you’ll thrive post-career.
Automatic Deductions Are Easy
By signing up for a supplemental retirement savings plan, you’re also signing up to take the money directly from your paycheck to invest it. It’s important to note that this money could either be a pre-tax deduction or an after-tax deduction, known as a Roth account, depending on your preference. This greatly reduces the likelihood that you’ll spend the money, since you won’t even see it. Even the best-intentioned individuals who say they’ll plan to invest the money on their own will eventually learn the hard way that they would’ve likely saved more by relying on automatic payroll deductions.
You Can’t Forget About Inflation
Inflation is often overlooked in retirement planning but is a huge factor to consider. When inflation goes up, your buying power goes down and your cost of living increases. If your investments don’t keep pace with the rate of inflation, you may lose purchasing power. Use this Inflation Calculator from the U.S. Department of Labor to see how inflation has affected your buying power over the years.
You May Be Able to Give Yourself a Loan
While your supplemental retirement savings plan should never be your first option, if you’re in desperate need of money, in some cases you are able to borrow from it. This does come with some stipulations though, which vary based on which program is available to you.
Interested in Enrolling?
When it comes to supplemental retirement savings plans, check with your employer to see what type of plans they offer, which will determine what plan you’re eligible for. Visit the Deferred Compensation webpage to learn how you can start your enrollment process today.