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Steps for Planning Your Retirement

2/12/2025

Retirement Planning

Planning for retirement is a critical step toward ensuring your financial security and peace of mind in your golden years. By starting early and leveraging resources like those offered by your financial credit union, you can build a solid retirement plan tailored to your needs and goals. Here’s a detailed guide to help you get started:

Step 1: Determine When to Start Planning

The earlier you start saving for retirement, the better. Time is one of your greatest assets due to the power of compound interest, which allows your savings to grow exponentially over time. Here’s a simple timeline for when to begin:

In Your 20s and 30s: Start contributing to retirement accounts as soon as you enter the workforce. Even small, consistent contributions can grow significantly over several decades.
In Your 40s and 50s: Focus on maximizing contributions and taking advantage of catch-up contributions if you’re behind on your savings.
In Your 60s and Beyond: Shift your focus toward preserving your savings and planning withdrawals to ensure they last throughout retirement.

Step 2: Calculate How Much You Need to Save

A good rule of thumb is to aim for 70-80% of your pre-retirement income to maintain your lifestyle after retiring. Factors to consider when estimating your needs include:

Expected living expenses (housing, utilities, food, etc.)
Healthcare costs (which often increase with age)
Travel and leisure plans
Potential long-term care expenses

Use our Retirement Income Calculator to estimate how much you’ll need and determine if you’re on track.

Step 3: Explore Types of Retirement Plans

Understanding the various retirement savings options can help you choose the best strategies for your goals. Here are some common types of retirement plans:

401(k) Plans: Employer-sponsored plans that allow you to contribute pre-tax income, often with employer matching.
Individual Retirement Accounts (IRAs):
- Traditional IRA: Contributions may be tax-deductible, and earnings grow tax-deferred until withdrawal.
- Roth IRA: Contributions are made with after-tax dollars, and qualified withdrawals are tax-free.
SEP IRAs and SIMPLE IRAs: Ideal for self-employed individuals or small business owners, these plans offer higher contribution limits.
Certificates of Deposit (CDs): Offered by financial credit unions like First South, CDs are a low-risk way to grow your savings with guaranteed returns.
Pensions: Employer-provided plans that offer a fixed income in retirement (less common today).

Step 4: Maximize Contributions

To make the most of your retirement savings:

Contribute at least enough to your 401(k) to receive the full employer match—it’s essentially free money.
Max out your IRA contributions annually. In 2025, the limits are $6,500 (or $7,500 if you’re 50 or older).
If you’re 50 or older, take advantage of catch-up contributions for both IRAs and 401(k) plans.

Step 5: Diversify Your Investments

A well-diversified portfolio can help balance risk and return. Consider a mix of:

Stocks for long-term growth
Bonds for stability and income
CDs for guaranteed returns
Mutual funds and ETFs for diversified exposure to markets

Your financial credit union can guide you in selecting the right investment options for your risk tolerance and goals.

Step 6: Monitor and Adjust Your Plan

Regularly reviewing your retirement plan ensures it remains aligned with your goals and lifestyle changes. Here’s what to do:

Check your progress annually using our Retirement Income Calculator.
Rebalance your portfolio periodically to maintain your desired asset allocation.
Adjust contributions if you receive a salary increase or experience major life changes.

Step 7: Leverage Credit Union Resources

At First South Financial, we’re committed to helping you achieve your retirement goals. Here’s how we can assist:

Retirement Account Options: Explore our Traditional and Roth IRAs with competitive rates.
Financial Counseling: Our advisors can help you create a personalized retirement savings strategy.
Savings Tools: Open high-yield savings accounts or CDs to grow your nest egg securely.

Start Planning Today

Retirement planning is an ongoing process that evolves with your life and financial situation. By starting early, making informed choices, and leveraging tools like our Retirement Income Calculator, you can build a secure financial future. Let First South Financial help you take the first step toward your retirement goals today.

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