Do you have a retirement savings account? If you’re a new NYSLRS member, your future pension could provide a significant portion of your retirement income, but it’s also a good idea to save for retirement to supplement your pension and Social Security.
Why Should You Save for Retirement?
Retirement savings can be an important financial asset when you retire. Savings can enhance your retirement lifestyle and give you the flexibility to do the things you want.
Your savings can provide money for traveling, continuing your education, pursuing a hobby or starting a business. The money you set aside can be a resource in case of an emergency, act as a hedge against inflation and boost your retirement confidence.
Setting a Retirement Savings Goal
How much to save is a personal decision, but here are some things to consider.
Financial advisers recommend that people save 10 to 15 percent of their gross earnings throughout their careers to be able to retire comfortably. But that advice is aimed at people with defined contribution retirement plans, such as a 401(k), as their main source of retirement income.
As a NYSLRS member, you’re part of a defined benefit plan, also known as a traditional pension plan. Your pension, based on your years of service and earnings, will provide a lifetime benefit. That benefit could replace a substantial portion of your earnings during retirement.
Having a pension means you may not need to save as much as someone with only a 401(k). If you’re just starting out in your career, you may want to pick a savings amount (or percentage of your earnings) you’re comfortable with. Use a retirement savings calculator to see how much your savings plan could yield over time or test the results of different savings amounts.
Here you can see potential savings results of someone who invests 50 dollars every two weeks over 30 years. While the stock market has been turbulent lately, stock values tend to rise. Over the long term, stock market returns average about 10 percent a year.
As you get closer to retirement, you should develop a plan to withdraw money from your retirement savings. A withdrawal plan will give you a better grasp of the income you can expect from your nest egg.
Here is one possible withdrawal strategy, which was designed to provide retirement income for 20 years. Please note, if your retirement is far in the future, the money you withdraw may not have the same value that it has today. However, while inflation has been high in recent months, it does cycle and has been much lower in the past.
If you find you’ll need to save more to meet your goal, you can start making adjustments to help ensure you’ll have enough savings in retirement.
How To Get Started
State employees and many municipal employees are eligible to save for retirement through the New York State Deferred Compensation Plan. Once you’ve signed up for the plan, your retirement savings (which may be tax-deferred, depending on your plan) will be automatically deducted from your paycheck. (The Deferred Compensation Plan is not affiliated with NYSLRS.)
Find out if your employer participates in the Deferred Compensation Plan. If they don’t, check with your employer’s human resources (personnel) office about other savings options you may be eligible for.
More Information About Retirement Savings
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