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Paycheck Chronicles

Do It Right: Buying A Car

When buying a car, it’s easy to get caught up in the excitement and forget about the finances. In other words, it can be hard...

Are You Saving for Retirement?

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It's not luck that enables people to retire younger, travel, and enjoy themselves — it's planning. Relying on Social Security or a company pension used to be enough, but today your own retirement savings have become an increasingly important factor in how comfortable you will be when you retire.

There are many reasons why tomorrow's retirees have to save more, including:

  • More income may be required for retirement years as many people retire earlier and live longer.
  • Health care costs, especially for the elderly, continue to rise faster than the cost of living.
  • Inflation erodes the purchasing power of retirees.
  • Many companies have replaced defined benefit pension plans with defined contribution plans that may not offer the same degree of assured income.

The good news is that careful planning can help fund a financially secure retirement.

There are three basic components of retirement income:

1. Social Security

Social Security provides a financial foundation for nearly everyone's retirement. Every year you should receive a copy of your Social Security statement from the Social Security Administration. If you would like an interim copy or have not received one, call 1-800-772-1213. There is also an on-line calculator at www.ssa.gov. When you have the information, review the history of your benefits. While Social Security should be viewed as a building block in your retirement plan, you must remember that the higher your pre-retirement income, the smaller the amount of income Social Security will replace.

2. Company Pension
Next, consider any potential benefits from your company's defined benefit pension plan. The amount of your pension benefit generally depends on your salary and your length of service with your company. Your company's pension or benefits administrator will help you determine what to expect from this source.

Once you know what Social Security and pensions are likely to contribute, you can compare this total to your current annual income. A rule of thumb suggests that retirement income should equal approximately 65 percent to 80 percent of your current income in order to maintain your current standard of living. And this amount will need to increase periodically in order to keep pace with inflation.

3. Your Savings
If there is a shortfall in your retirement income, where will the missing money be found? Personal savings are the third element in successful retirement planning. And it is the most crucial of the three, because it is the variable that often determines how comfortable your retirement will be. Personal savings, invested as early as possible in your working career, combined with tax-advantaged strategies, can be the key to an independent and financially secure retirement.

AXA Advisors, LLC does not provide legal or tax advice. Please consult your tax or legal advisor regarding your individual situation.

Joy Jackson offers securities through AXA Advisors, LLC, 1633 Broadway, New York NY, 10019, member NASD, SIPC, and offers annuity and insurance products through AXA Network, LLC and its subsidiaries.

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