AAGCU is here to help you navigate one of the most important journeys of your life—retirement planning. Whether you’re just starting your career or approaching retirement age, having a plan in place is essential for a secure and enjoyable retirement. It’s never too early to start saving and you should start building your retirement accounts as soon as you can afford to contribute. In this blog, we’ll discuss the tips and tricks to help you prepare for a financially stable future.
Compound Interest
One of the biggest advantages of saving for retirement early is the power of compound interest. Compound interest is the resulting interest made on the combination of the principal amount and the earned interest from previous periods. Meaning, the earlier you begin saving, the more time your money has to grow. Small, consistent contributions made early into your retirement account can accumulate into strong savings over time. Consider setting up an automatic deposit to your retirement account to make saving a regular habit.
Understand Your Retirement Accounts
Familiarize yourself with the different types of retirement accounts:
401(k) Plans: Often offered by employers, allow you to save pre-tax dollars, reducing your taxable income for the year. Many employers also offer matching contributions, which your employer will contribute the same or up to a percentage of your individual contributions a year.
Individual Retirement Accounts (IRAs): IRAs come in two main types—Traditional and Roth. Each has its own benefits, so it’s important to choose the one that aligns with your financial goals.
Traditional IRAs are tax-deferred growth, meaning the funds added to the account are not taxed until you withdraw.
Roth IRAs funds are taxed when being added to the account, which provide a tax-free withdrawal in retirement.
Alaska Air Group Credit Union IRA Savings Account: At AAGCU, we offer IRA savings accounts. Open a risk-free IRA savings account to receive rates above standard savings accounts and tax advantages. As of August 2024, we offer IRAs at 2.11% Annual Percentage Yield. It’s never too early to start planning for your retirement, start saving today.
You must establish membership with Alaska Air Group Credit Union before you can open an Individual Retirement Account with us. Apply online to open a membership account.
Already a member? Please contact us to learn more and apply.
Visit us at one of our branch locations, email info@aagcu.org, or call 206-824-9800
Create a Retirement Budget
Understanding your future expenses is crucial for effective retirement planning. You can start by estimating your monthly expenses in retirement (including housing, healthcare, groceries and activities). Don’t forget to account for inflation, as the cost of living tends to grow over time. Having a budget is a good starting point to help you determine how much you need to save to achieve your retirement goals.
Healthcare costs can be one of the largest expenses in retirement. Consider setting aside funds in a Health Savings Account (HSA) or other dedicated savings vehicle to cover medical expenses. Additionally, familiarize yourself with Medicare and other healthcare options to understand what will be available to you in retirement.
Diversify Your Investments
A well-diversified investment portfolio can help you achieve your retirement goals. Consider a mix of stocks, bonds, and other assets to spread out your risk.
Review and Adjust Your Plan Regularly
Retirement planning is not a one-time thing, rather it’s an ongoing process. Life events, such as a change in income, marriage, or the birth of a child, can impact your retirement strategy. Regularly reviewing your plan and making adjustments when needed can help ensure you’re on track to meet your goals.
Banzai Tool
Don’t know where to start or having a hard time visualizing long term? Our financial wellness tool, Banzai, can help you play out different scenarios.
Access the Banzai Retirement Course by logging in or creating an account with Banzai, and then mouse over the “Explore” dropdown, navigate to “Courses”, then “Banzai Plus”, then select the “Retirement Course”.
Conclusion
Retirement planning can seem daunting, but with the right tools, you can build a secure future. Start early, know your options, and regularly review your plan to stay on track.
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