Looking Back on the Future
Humorist Will Rogers once remarked how half our lives are spent trying to find something to do with the time we rush through life trying to save. It’s an appropriate commentary on the pace of life and how we measure the value of time, the most important asset we have.
If you’ve just entered the workforce, it might seem a bit soon to talk about retirement planning. But this is the perfect time. You make your own decisions and control how you’ll get there, especially as your goals change throughout your life.
Here are five questions young professionals should ask about retirement saving.
What dollar amount do you need for retirement? The typical figure thrown out is $1 million. That can be in the form of a combination in savings, investments*, pensions, Social Security, even continuing to work part-time if you want. That’s not a bad starting point, but you may need more, depending on a number of variables. The biggest factor is the standard of living you’re comfortable with, along with things like the amount of traveling you plan on doing or whether you have bills like a mortgage.
How much do you sock away from each paycheck? Experts suggest a range of about 15 percent to 25 percent of your annual income. At this point, 15 percent is a good target, but it might go up as you get older. Many experts say that by the time you turn 50, you should have about six times your salary in savings. Check out Origin’s time calculator to get an idea of how your savings grow as you get older.
Doesn’t a retirement account come with a long-term commitment? Sort of. Retirement savings are typically not liquid. If you’re short on cash this month, you can’t just dip into retirement and put it back next month. Still, the money you contribute to the account is yours. You may have to wait several years before you have access, but you’re not giving your money to someone else. You also have options. Origin offers a number of ways to save and invest.
Why would you put money someplace if you can’t get to it? It’s not like a retirement account is a financial black hole until you actually stop working. They come with some nice advantages. Contributing to your company’s 401(k) program lowers your taxable income. And the money in the account is tax deferred, so you can put off the taxes you owe until you’re required to start withdrawing the money.
So is it worth signing up for the company 401(k)? A thousand times, yes. These programs come with matching funds from your employer up to a certain percentage. Your company is literally giving you money, so take it. And here’s another advantage: You can include the employer match in the percentage of your annual savings goal and still hit your target amount.
You worked hard to get to this point in your life. But you’re not alone for all that’s still ahead. Contact Origin Bank, and speak with a certified financial planner who can walk you through the options* and save on a pace that’s right for you.
*Investment and services are not a deposit, not FDIC-insured, not guaranteed by the bank or an affiliate of the bank, may go down in value (if applicable), and not insured by any federal government agency.