Are You On Track for Retirement?

Contributing regularly to your retirement savings plan is one of the most important commitments you can make to your future self. But how can you know if you’re on track for a financially secure retirement?

How much will I need?

According to experts, you should aim to replace between 70% and 90% of your annual preretirement income. For example, someone earning $60,000 annually before retirement should expect to need between $42,000 to $54,000 annually upon retirement, at least in the first few years.

There are more precise ways to calculate not only how much income you’ll need during retirement but also what percentage of each paycheck should go into your retirement savings now. An EY financial planner can help you customize your retirement income goals. You can also consider the age at which you want to retire, the lifestyle you hope to lead, your life expectancy, inflation, the projected return on your savings and any defined benefit payments.

Increase your savings each year and earn your match

Even a small amount of pay set aside now on a pre-tax basis can add up to a significant balance over time, thanks to the compounding of tax-deferred investment earnings. If you are eligible for “auto-escalation” in your conference or employer’s plan, your contributions automatically increase by 1% a year unless you opt out. If you are not eligible for auto escalation, consider increasing your contributions periodically when you can. Also, make sure you contribute enough to get the full matching contributions your conference or employer may offer.

Allocating your assets

At least once a year, be sure to review how your savings are allocated across stocks, fixed income and cash. With LifeStage Investment Management, offered through Wespath, it’s easy to automate your investments based on your risk tolerance and other key personal information. An EY financial planner* can help you determine whether LifeStage is right for you or help you with choosing your asset allocation. Call EY at 1-800-360-2539.

Read the article “LifeStage Investment Management: 4 Benefits of Automating Your Investments” in this edition to see how LifeStage helps you stay on track for retirement.

* EY Financial Planning Services are available to active Wespath participants and surviving spouses with account balances, and to retired and terminated participants with account balances of at least $10,000. Costs are included in Wespath’s operating expenses that are paid for by the funds.

Source: EY Financial Planning article—ASK A PLANNER: Are you on track for retirement?