Bridging the Retirement Income Gap

"Have you looked at your “retirement income gap”?

It is estimated that most individuals will need at least 70 percent of their current income to retire comfortably. Pensions and social security may represent a substantial piece of your income in retirement, but will it be enough to support the lifestyle you desire? Supplemental retirement savings can help bridge the financial gap between your retirement income and expenses — also known as the retirement income gap.

Questions about bridging the gap...

• What are supplemental retirement plans? These are voluntary savings accounts — such as 401(k), 457(b) or 403(b) plans — which offer tax-deferred savings or tax-free growth potential.

• What is the best way to save and grow assets outside of supplemental retirement plans? Depending on your tax situation, growth in non-retirement accounts is taxed at capital gain rates between 15-20%. Consider growth versus income producing investments in these types of accounts to mitigate income taxes.

• How much should I save?  It depends on your life circumstances and finances. Key considerations should include: desired retirement lifestyle, health care costs and number of years in retirement.

• How do I get started? As mentioned in a previous Blog, developing and reviewing a comprehensive financial plan is critical in helping you toward your goals. Understanding how your assets are growing, how much you should be saving and how much money you will need in retirement will give you a greater confidence in your long-term plan.