Understanding Your Retirement Needs

Before you start saving, it's important to assess how much money you'll need for retirement. Consider factors such as:

• Your desired retirement age
• Your expected cost of living
• Health care expenses
• Inflation and economic conditions
• Travel or hobbies you wish to pursue

Financial advisors often suggest aiming to replace about 70-80% of your pre-retirement income to maintain your standard of living. However, individual needs may vary.

Retirement Savings Tips for Traditional Employees

If you work a traditional job with an employer, you likely have access to workplace benefits that can help you save for retirement. Here are some strategies to maximize your savings:

1. Take Advantage of Employer-Sponsored Retirement Plans

Many employers offer 401(k) or 403(b) plans, which allow you to contribute a portion of your salary before taxes. Key benefits include:

• Tax-deferred growth on investments
• Employer-matching contributions (free money!)
• High annual contribution limits

Be sure to contribute at least enough to get the full employer match, as this is essentially free money that will compound over time.

2. Open an IRA (Individual Retirement Account)

If your employer does not offer a retirement plan or you want additional savings, consider opening an IRA. There are two main types:

• Traditional IRA: Contributions are tax-deductible, and taxes are paid upon withdrawal.
• Roth IRA: Contributions are made with after-tax money, but withdrawals in retirement are tax-free.

IRAs provide flexibility and tax advantages depending on your financial situation.

3. Automate Your Savings

Setting up automatic contributions to your retirement accounts ensures consistency and discipline. Many financial institutions allow you to schedule regular transfers, helping you build wealth effortlessly over time.

4. Increase Contributions Over Time

As you receive raises or bonuses, increase your retirement contributions. A good rule of thumb is to save at least 15% of your income, but if you're starting late, aim for 20% or more.

Retirement Savings Tips for Nontraditional Workers

Freelancers, gig workers, and small business owners often lack employer-sponsored retirement plans, but they still have many options for building their retirement funds.

1. Open a SEP IRA or Solo 401(k)

• SEP IRA (Simplified Employee Pension): Ideal for self-employed individuals and small business owners. Allows contributions of up to 25% of your net earnings, with higher contribution limits than a traditional IRA.
• Solo 401(k): Designed for self-employed individuals with no employees. Offers both employee and employer contributions, maximizing savings potential.

Both options provide tax-deferred growth, helping self-employed individuals save more efficiently.

2. Consider a Roth IRA

A Roth IRA is an excellent choice for self-employed individuals, especially those expecting their income to rise in the future. Since contributions are made with after-tax dollars, your retirement withdrawals will be tax-free.



3. Diversify Investments

Unlike traditional employees who often rely on employer-sponsored plans, freelancers and gig workers should focus on diversifying their investment portfolios. Consider a mix of:

• Stocks and bonds
• Real estate investments
• Index funds and ETFs

A well-balanced investment strategy can help manage risks and provide steady growth over time.

4. Budget for Retirement Contributions

Since self-employment income can be inconsistent, it's essential to budget for retirement savings. Set aside a percentage of each paycheck for retirement contributions to ensure consistent savings.

5. Get Disability and Health Insurance

Freelancers and gig workers lack employer-sponsored benefits, so it's vital to secure disability and health insurance. These policies protect your income and savings in case of unexpected medical issues or an inability to work.

Additional Tips for Everyone

Regardless of your employment type, these additional strategies can boost your retirement savings:

1. Reduce Unnecessary Expenses

Cutting back on non-essential spending frees up more money for retirement savings. Create a budget and identify areas where you can save.

2. Pay Off High-Interest Debt

Prioritize paying off credit card debt and high-interest loans to reduce financial strain in retirement. Debt-free living allows you to allocate more funds toward savings.

3. Delay Social Security if Possible

Delaying Social Security benefits until age 70 can increase your monthly payments, providing greater financial security in retirement.

4. Work with a Financial Advisor

A professional can help tailor a retirement savings plan based on your specific needs and income sources.

How Sally Bernard Can Help You

Saving for retirement can feel overwhelming, but you don’t have to do it alone. As a debt consultant and budgeting expert, Sally Bernard can help you create a personalized savings plan that aligns with your financial goals. Whether you're a traditional employee or a freelancer, Sally can guide you in making smart financial decisions to secure your future. Contact her today to start planning for a stress-free retirement!