Traditional estimates say that you will need approximately 80% of your annual pre-retirement income for each year you are retired in order to maintain the standard of living you enjoy at the time you retire. Social Security will provide less than 50% of your retirement income. And since we live longer, most people today can expect to enjoy retirement for at least 25 years.
First job: Begin regular contributions to a personal retirement savings vehicle as early in your working years as possible. Maintain this habit with every job you take. The earlier you start saving, the greater effect compound interest can have on the contributions.
Most employers offer a pre-tax, contributory retirement savings plan to their employees [401(k), 403(b)], etc. Contribute as much as you can per pay period, even if it’s just 1% to start. If you receive a pay raise, increase your contributions by the same amount before you start spending it. This adds more to your savings and lowers your tax burden.
Every year: Have an annual check-up — fiscally and physically.
Health-wise, visit your primary care provider for an annual preventive exam to help you determine, monitor, and maintain your optimal health. Aside from getting the obvious benefits, your best health can free up more of your finances for increased retirement savings.
Financially speaking, check your net worth. To calculate your net worth, subtract your total liabilities (what you owe) from your total assets (what you own). Do you have significant debt that you need to reduce and eliminate now so that you could save more for retirement? Keep track of how you spend your money and adjust your budget as needed.
Also, review and file your quarterly or annual statements. Read your quarterly retirement savings plan statements and adjust your investment distributions as needed.
Check your annual benefit statements from Social Security and your employer-provided pension. Make sure your salary was reported correctly each year. If your salary is under- or over- reported, it does negatively affect the retirement, disability, and death benefit payable to you or your dependents.
10-15 years before retirement: Start envisioning retirement. For clergy and lay church professionals participating in the Benefits Plan of the Presbyterian Church (U.S.A.), attend a Growing into Tomorrow … Today seminar on retirement planning offered by The Board of Pensions of the Presbyterian Church (U.S.A.).
Where will you live? What will you do with your time? How will your relationships with family and friends change? What investment changes do you need to make to maximize your remaining retirement savings possibilities? Are there hobbies or interests you want to renew before you retire?
If you have a spouse, see if your thoughts match. Maybe your husband thinks you’ll retire to Colorado to enjoy all that the Rocky Mountains offer, but you’re planning to live in coastal Virginia to make the most of the beaches and fresh seafood you both love so much.
Think about your expenses after retirement. What costs will disappear, decrease, or increase? Divide your retirement years in three categories: go-go years, slow-go years and no-go years. Which retirement expenses will cost more at which stage?
Five years before retirement: Investigate community and housing options for the next stage of your life. Also, check with your employer to confirm if any benefits you currently enjoy as an active employee will change or be discontinued with your retirement.
Two years before retirement: Check with your employer to learn how your pension works, to obtain a pension estimate and to find out how early you need to submit your retirement paperwork. Your employer may need several months to process your paperwork to ensure that your pension payments initiate on time for the first pay date after your retirement.
One year before you retire or age 64, whichever comes first: Make an appointment to visit your local Social Security office for information about your retirement and survivor benefits, to learn how Medicare works, etc. By making an appointment, the staff person can pull your file, review the contents and be better prepared to answer the questions you will have. You also get his/her undivided attention.
Additionally, learn more about the many programs and services for retired people, such as the Volunteer in Mission (VIM) programs of the Presbyterian Church (U.S.A.).
4-6 months before retirement: Decide on your exact date and notify your employer. Obtain your retirement packet and submit the paperwork by the appropriate date to ensure your pension payments are not delayed.
1-3 months before retirement: Focus on transition issues at work related to your retirement so that you can tie up any loose ends and leave in good standing. Also, prepare yourself for the mixed emotions you will experience. Be open to expressions of gratitude from co-workers or your ministry.
Nadine Monn is Coordinator of Education Programs, The Board of Pensions of the Presbyterian Church (U.S.A.). For further information regarding the Board of Pensions pension (retirement) plan, contact the Board of Pensions Member Services at 800-773-7752 (800-PRESPLAN).
Retirement Resources*
www.pensions.org — Board of Pensions of the Presbyterian Church (U.S.A.)
www.pcusa.org — Presbyterian Church (U.S.A.)
www.socialsecurity.gov — Social Security Administration
www.medicare.gov — Medicare
www.money.com — Financial calculators, numerous planning resources
www.irs.ustreas.gov — Internal Revenue Service
www.newslink.org — A link to thousands of national and local newspapers, magazines, and radio/TV sites
www.refdesk.com/paper.html — Another link to global, national newspapers
www.alz.org — Alzheimer’s Association
www.acefitness.org — American Council on Exercise
www.ama-assn.org — American Medical Association
www.arthritis.org — Arthritis Foundation
www.ncoa.org — National Council on Aging
www.ncadi.samhsa.gov — U.S. Dept. of Health and Human Services, Alcohol and Drug information
www.health.gov/nhic — National Health Information Center
www.nof.org — National Osteoporosis Foundation
*Excerpted from “Growing into Tomorrow … Today,” a handbook of the Board of Pensions’ retirement seminar. Used by permission.
