Plan Your Retirement FAQ

Common guidance suggests 10-15% of gross income minimum, including employer match. Age-based targets: 1x salary by 30, 3x by 40, 6x by 50, 8x by 60, 10x by 67. Starting with employer match, then increasing 1% annually until reaching 15%+. High earners may need 20%+ due to Social Security caps.

401(k): Employer-sponsored, $23,000 limit (2024), potential matching, limited investment options, loans available. IRA: Individual account, $7,000 limit (2024), more investment choices, no loans. Use both: get full employer match first, then max IRA, then return to 401(k).

Traditional: Tax deduction now, pay taxes in retirement. May benefit those in high tax bracket now expecting lower bracket in retirement. Roth: No deduction now, tax-free in retirement. May benefit those who are young, in low bracket now, or expect higher taxes later. Many use both for tax diversification.

Withdraw 4% of retirement savings annually to make money last 30 years. Example: $1 million portfolio = $40,000/year. Based on historical market returns. Conservative approach uses 3-3.5%. Adjust based on market conditions, expenses, and other income sources like Social Security.

401(k)/IRA: Age 59.5 without penalty (some exceptions exist). Social Security: Age 62 (reduced benefits) to 70 (maximum benefits). Full retirement age: 66-67 depending on birth year. Early retirement possible but requires careful planning and potentially higher savings rates.

Strategies include: 1) Maximize catch-up contributions (50+: extra $7,500 401k, $1,000 IRA), 2) Delay retirement 2-3 years, 3) Reduce expenses, 4) Consider part-time work in retirement, 5) Downsize housing. Even starting late, compound growth can still build significant wealth.

Pros: Guaranteed return equal to mortgage rate, peace of mind, lower retirement expenses. Cons: Lose tax deduction, opportunity cost if investments return more than mortgage rate. May be beneficial if mortgage rate >4-5% or you're risk-averse.

Social Security replaces ~40% of pre-retirement income for average earners. Claiming strategies: Age 62 (75% of full benefit), Full retirement age (100%), Age 70 (132%). Delaying increases benefits 8%/year. Check your Social Security statement annually at ssa.gov for benefit estimates.