Saving for Retirement

The PICPA Pennsylvania Institute of Certified Public Accountants (PICPA) The PICPA is a professional association of more than 22,000 members working together to improve the CPA profession and serve the public interest.

Saving for Retirement Evaluating Your Goal Retirement means different things to different people. You must evaluate what will impact your retirement goals and what you hope your retirement will look like.

Saving for Retirement Things to Consider What do you want to do after you retire? Where do you want to live? Would you be able to stay in your existing home? Will you want to move to a warmer climate? Will you be alone, with a spouse, with other family? Would you prefer a retirement community?

Saving for Retirement Your Future Plans Estimates suggest that retirees will need 70% of their pre-retirement earnings to maintain their standard of living. This can vary, depending on your retirement goals— travel, hobbies, starting your own business.

Saving for Retirement Ballpark Estimate There are resources to help you estimate your cost of living in retirement: retirement calculator Money tab calculators

Saving for Retirement Retirement Costs Can include: Food and clothing Housing and utilities Transportation Insurance Recreation: travel, dining out, entertainment, hobbies Health care costs: nursing homes, home health care

Saving for Retirement What about Social Security? How much you receive depends on a few factors: How much you’ve earned and how long you’ve worked Date you start collecting benefits Whether you work after retirement Whether family members will collect benefits Whether you receive certain other government benefits

Saving for Retirement Get an Estimate The best way to get an estimate of how much you’ll receive from Social Security is to ask! Use Social Security Retirement Benefits Estimator.

Saving for Retirement Ways to Save 401(k) Accounts Employer makes contributions to the plan on a pre- tax basis You can defer up to large portions of your salary Earnings accrue tax deferred Contribute the maximum even if your employer doesn’t match it

Saving for Retirement Ways to Save Roth IRA Investments accumulate tax-free A withdrawal from a Roth IRA is not taxed if it is made 5 years after the first contribution and is done after age 59 ½ There are income limits

Saving for Retirement Ways to Save Traditional IRAs Money invested grows tax-free until it is withdrawal Heavy penalties if withdrawn before age 59 ½ Income and qualification restrictions apply

Saving for Retirement Ways to Save Annuities Tax deferred investment contract Multiple payout options: – Lump sum, payment over a number of years, payment over your lifetime You have the freedom to decide how the money is paid out Can invest as little or as much you want

Saving for Retirement Planning Tips Start early! Invest for the long term Don’t cash out your 401(k) when you change jobs— it could be rolled into a new employer’s plan Don’t borrow against your retirement plan unless absolutely necessary

Saving for Retirement Planning Tips Supplement retirement accounts with mutual funds, savings accounts, and other investments Cut your current expenses Delay retirement Invest more aggressively—this will expose you to higher volatility

Saving for Retirement Questions?