When I was in fourth grade my mother asked me to clean the refrigerator. The fridge was white and instead of just cleaning it, I decided to spray it with a can of white paint! It did not work so well. I remember my father telling my mother, “Well honey, it’s a good thing we have 10 kids. At least one of them should be able to take care of us when we retire!”

Relying on your children to take care of you during your retirement years may not be the easiest solution to achieving financial security. It takes determination, planning and following through. Below are some strategies that may help.

1.       Social Security

Social Security for many of us, is a major way of replacing income when we retire. It replaces a percentage of a worker’s pre-retirement income based on your lifetime earnings. Understanding the range of benefits available to you, maximizing your current earnings and coordinating your spousal benefits are just a few ways to set yourself up for a more comfortable retirement.

2.       Credit Card Debt

Credit cards can have extremely high interest rates attached to them, so balances can accumulate quickly.  If you have more than one card, try to pay off the one with the highest interest first.  Try not to miss any payments and pay at least the minimum amount in order to keep your credit rating safe.

3.       Contribute to your 401(k)

A 401(k) is a powerful tool for retirement savings. Take advantage of the match contribution your employer may have. It’s free money and if you can, try to increase your contribution each year. 

A contribution at age 25 looks a lot different from a contribution at age 55. It is amazing how money can work for you if you start early.

4.       Consider a Roth 401(k) or Roth IRA

Take advantage of a Roth 401(k) or Roth IRA if you have the chance. The gratification of these options are the earnings on the account, which are tax free when distributed for qualified reasons. Having the ability to control taxes during retirement is a huge benefit.

It’s important to note that tax laws are constantly changing, so it is always wise to consult a tax advisor regarding your retirement assets.

5.       Have an Emergency Fund

Life is unpredictable! Having an emergency fund with 3-6 months of your salary may give you cushion when events occur beyond your control.  An emergency fund can help you avoid tapping into your retirement accounts, which could result in IRS penalties and taxes.

It takes discipline and determination to make your financial security goal a reality.  For more information on strategies to use for retirement security contact Jim Spaniol at Falcon National Bank.

Jim Spaniol Business Development Manager 320.223.6307 JSpaniol@falconnational.com