You may not see it posted on your calendar, but October 16 – 22 is National Save for Retirement Week. This annual event, endorsed by Congress, is designed to raise awareness about the importance of saving for retirement — so you may want to take some time this week to review your own strategy for achieving the retirement lifestyle you've envisioned.
If you're not convinced of the need for an event such as National Save for Retirement Week, just consider these statistics, taken from the Employee Benefit Research Institute's 2011 Retirement Confidence Survey:
•The percentage of workers not at all confident about having enough money for a comfortable retirement grew from 22 percent in 2010 to 27 percent — the highest level measured in the 21 years of the Retirement Confidence Survey.
•56 percent of respondents say that the total value of their household's savings and investments, excluding the value of their primary home and any defined benefit plans (i.e., traditional pension plans) is less than $25,000.
•Less than half of the respondents say they and/or their spouse have tried to calculate how much money they will need for a comfortable retirement.
These numbers are obviously troubling — and they indicate that most of us probably need to put more thought and effort into our retirement savings. What can you do? Here are a few suggestions:
•Determine how much you'll need in retirement. Try to define the lifestyle you want during retirement. Will you travel the world or stay close to home? Will you work part time or spend your hours volunteering or pursuing hobbies? Once you know what your retirement might look like, try to estimate how much it might cost.
•Identify your sources of retirement income. Take into account your IRA, 401(k) or other employer-sponsored retirement plan, Social Security and other savings and investments. How much income will they provide? How much can you withdraw from these vehicles each year without depleting them?
•Calculate any retirement shortfall. Try to determine if your savings and investments will be enough to provide you with an income stream that's adequate to meet your retirement needs. If it isn't, develop an estimate of the size of the shortfall.
•Take steps to close savings "gap." If it doesn't look like you'll have enough to meet your retirement needs, you may consider adjusting your savings and investment strategy. This may mean contributing more to your IRA, 401(k) and other retirement accounts. Or, perhaps your investment mix may need to be reviewed to find a better balance growth potential with risk. Or you may need to take both of these steps.
•Monitor your progress. Once you've put your investment strategy into place, you'll need to monitor your progress to make sure you're on track toward achieving your retirement savings goals. Along the way, you may have to make adjustments, if there are changes in your objectives or your specific situation.
Taking these types of action can be challenging, so you may want to work with a professional financial advisor who has the experiences and resources necessary to help you identify and work toward achieving your retirement goals. In any case, though, National Save for Retirement Week is a great time to consider your course of action.