What's Standing Between You and Retirement?

Did you know AAA offers products that can help you retire when you want? While saving in your early years always is the best strategy, there’s still time for late starters. Here are a few tips that can set you on your way to financial security in your retirement.
 
Tip 1: Save big starting now
A few years of serious saving can make a huge difference. As a rule of thumb, anyone under age 70.5 with earned income can make yearly contributions of up to $5,500 to an Individual Retirement Account (IRA), and if you’re over age 50, you can contribute an additional $1,000 yearly. Also, aim high in your saving strategy. A $1 million nest egg sounds like a lot, but spread over a 30-year retirement, it amounts to about $50,000 a year.
 
Tip 2: Personal savings, annuities, and CDs are key
A pension won’t cover all you need for retirement. According to the Employee Benefit Research Institute (EBRI), the average annual pension payout for those age 65 and older is around $10,900. Other types of investments that offer lifetime income streams may be able to fill the gap. Personal savings typically make up half of the income stream for retirees. Save now by opening an IRA and taking advantage of 401(k) contribution limits to put away the maximum amount. For additional savings options, some retirees consider a tax-deferred annuity, which works like an IRA without a tax deduction when putting money in, and there is no age or contribution limit. With CDs, many engage in a laddering strategy of spreading savings among a variety of CDs with different maturity dates and rates.
 
Tip 3: Don’t bank on working until you are 70 
While about a quarter of employees aim to work until age 70, only 8 percent of current retirees manage to stay employed that long, according to EBRI. Health problems, layoffs, and the need to care for a family member typically drive the decision to retire earlier than planned. It’s important to save now so you are prepared for the unknown. And always consult a financial planning professional to learn about the best investment strategies for you.