Saving for Retirement
The three most common options to save for retirement are:
- Retirement loans offered by an employer
- Savings and Investments
- Social Security
As you approach retirement, there are many things to think about. Experts advise that you will need about 80 percent of your pre-retirement income to continue your current quality of life. The exact amount depends on your individual needs. Some important factors to consider include:
- At what age do you plan to retire?
- Can you participate in an employer’s retirement savings plan, such as a 401(k) plan, or a traditional pension plan?
- Will your spouse or partner retire when you do?
- Where do you plan to live when you retire? Will you downsize, rent, or own your home?
- Do you expect to work part-time?
- Will you have the same medical insurance you had while working? Will your coverage change?
- Do you want to travel or pursue a new hobby that might be costly?
Tools to Help You Prepare for Retirement
To help you plan for retirement:
- Find practical tips for building retirement savings in the Top 10 Ways to Prepare for Retirement(PDF, Download Adobe Reader).
- Use a retirement calculator to find out the best age to claim your Social Security benefits.
- Find out the trade-offs between taking your pension in a monthly payment or in a lump sum(PDF, Download Adobe Reader).
- Social Security pays benefits that are on average equal to about 40 percent of your pre-retirement earnings. You may be able to estimate your benefits.
- Learn how you can boost your retirement savings at Investor.gov.
- If you have a financial adviser, talk to him or her about your plans.
Social Security and How It Works
What’s Social Security?
Social Security is a federal government program that provides a source of income for you or your legal dependents (spouse, children, or parents) if you qualify for benefits. You also need a Social Security number to get a job.
Find how to apply to get a Social Security number or to replace your Social Security card.
How Do Benefits Work and How Can I Qualify?
While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to those who are currently retired, to people with disabilities, and to the surviving spouses and children of workers who have died. Each year you work, you’ll get credits to help you become eligible for benefits when it’s time for you to retire. Find all the benefits Social Security Administration (SSA) offers.
There are four main types of benefits that the SSA offers:
- Retirement benefits
- Disability benefits
- Benefits for spouses or other survivors of a family member who’s passed
- Supplemental Security Income (SSI)
How to Open a “my Social Security” Account
If you receive or will receive Social Security benefits, you may want to open a “my Social Security” account. This online account is a service from the SSA that allows you to keep track of and manage your SSA benefits, and allows you to make changes to your Social Security record.