Why Saving For Retirement Isn’t a One Size Fit’s All

Why Saving For Retirement Isn’t a One Size Fit’s All

February 18, 2022

Have you ever asked yourself, “How do I save for retirement?” You’ve probably been presented with the options at your workplace – store away part of your paycheck in your 401(k), if you’re lucky you may have some deferred compensation options as a part of your benefits package as well.

But is that all? Can stowing away 5-10% of your paycheck really get you where you need to be in terms of retirement?

Unfortunately, it’s often not quite that easy and that’s because there is no one way for everyone to save for retirement, meet their financial goals and live a work-optional lifestyle down the road. For some people, the  Traditional 401(k) route might get you there, but it might not be the most tax-efficient method of saving in your retirement years.

For others, you may need to investigate other investment vehicles like Individual Retirement Accounts (IRAs), Backdoor Roth Strategies, and investing in taxable accounts as well. So, where should you start?

Take Advantage of Employer Sponsored Plans

If you’re not self-employed, there is a good chance that your employer offers some type of retirement savings plan. For most, it’s the option between a Traditional 401(k) or Roth 401(k). But for others, it might be a 403(b), 457 plan or another deferred compensation plan. Whatever the benefit might be, you want to make sure you’re taking advantage of it, especially if an employer match is involved.

Employer matches are a part of your total compensation package, and you don’t want to be leaving free money on the table when it comes to your savings plan. If you’re not already enrolled in your employer’s retirement plan, go back and take a look at the benefits they are offering you, how to enroll, and how to start saving for your retirement one day.

Talk to a Wealth Advisor

When we’re talking about experts in retirement planning, there’s really no one better to consult than a wealth advisor. Retirement planning is what we do day in and day out. We help clients invest their money, manage their assets, make sure their finances and livelihoods are protected, and save enough to reach retirement. So whether it’s just to have a second set of eyes on which employer sponsored plans you should be participating in, helping you set up individual retirement accounts for your own business, or helping you invest in the market, we are here to lend a hand and find a strategy that works for you.   

As you start to approach retirement, we’ll use financial plans to project when you can comfortably retire, what kind of income you can expect in retirement, and set goals to get you to the place where work becomes optional.

Save in Individual Accounts and Diversify Your Tax Buckets

Once you have your employer sponsored retirement plans set up, you’ll want to start saving in some individual accounts as well. Depending on your income, you might be eligible to save in a Roth or Traditional IRA. Furthermore, you’ll probably want to open a brokerage account to stow some money away. While these accounts are taxable, they don’t have withdrawal penalties and can serve as a way to save for the other financial goals you have in your life and a place to draw money should you have an income need.

While virtually everyone is saving for retirement, the way we approach it is unique to each of us. Partly because of the jobs we have, the benefits we’re offered, the amount of money we earn and the lifestyle we envision in retirement. The best place to start is to take advantage of the retirement accounts that are offered to you, work with an advisor to help design a strategy for you, and save and invest in other vehicles as well.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.