Page 55 - Book3E

retirement, but this is an average. Depending on your income and fixed expenses, you may not be able to contribute 10%. On the other hand, it may make sense for you to contribute more than 10%.
Just remember to take advantage of your employer’s 401(k) plan or other tax-deferred retirement plan. Your contributions will be made with pre-tax dollars, and taxes on earnings will be deferred until you withdraw them during retirement. Even better, many employers will match all or part of your contribution, which means significant gains for you.
As mentioned earlier, if you change jobs, don’t make the mistake of taking possession of your 401(k) plan investments. You may be able to keep your funds in your employer’s plan or roll them into a new employer’s plan. If not, you can always set up a bridge IRA specifically for this purpose.
When you reach your 40s, it’s a good time to estimate how much income you’ll need to live on after retirement. People are living longer, so chances are you could need more money than you think. Determine whether or not your mortgage will be paid off by then. If so, you may need considerably less income than you do now. What about the retirement lifestyle you’ll want to lead? Do you plan to buy a vacation home or travel extensively? How much money will be required to do this? After you retire, you may have to pay for your own health insur- ance, which can be very expensive. Have you factored this into your estimates?
By regularly reviewing your spending, saving, and investing habits, you can keep on track for a secure financial future.
Your 50s and 60s
By the time you’re in your 50s, your kids are likely on their own and you’re probably at the highest income level of your career, and can really focus now on building your retirement assets.
The Different Stages of Life and their Financial Demands 47