With the year halfway over, many are looking to take stock of their financial progress. Liz Miller, certified financial planner and founder of Summit Place Financial Advisors, joined TheStreet to discuss how to get back on track if you’re behind on your retirement goals.
Transcript:
CONWAY GITTENS: Let’s transition to retirement, which is a form of savings. So what’s the best way to play catch up. If it’s the mid-year financial checkup and you realize that you’re not where you want to be in terms of saving for retirement. Now here we are, middle of the year. What’s the best way to play catch up?
LIZ MILLER: There’s a lot of ways to get there, right. First of all, I would say there’s a lot of great we call them calculators online. Take a look online, see what it shows you. We kind of like to say, depending on your age, think about trying to accumulate about 10 times your income currently to be ready for retirement. So that’s just a rule of thumb to get started. So if you find you’re behind the eight ball, the easy answer is I guess I have to save more. But how do we do that. If you’ve got a 401(k) plan or a 403(b) at work. A lot of times we find people are only contributing up to a match and they’ll tell you I’m at the maximum, I get the full match. And we say, no, no, no, no. So let’s go beyond the match. So the first thing that is always one of the best ways to save at work. It comes right off your paycheck and those are usually great programs. So if you can try upping for the second half of the year how much you’re taking out for your 401(k), you can usually adjust those a lot.
I work with a lot of young people in their 20s where when I have a discussion with them, they don’t even really know what they can live on. So we say, well, let’s move it. Until you feel a little pain, you let me know. And then we’ll pull it back. So we kind of keep pushing more and more of their paycheck to be immediately taken into that retirement plan. Another way to do it, particularly if you don’t have a retirement plan at work, is to again, take it right off the top, set up a transfer from your checking account where your paycheck comes right into a Roth IRA open a Roth IRA at a Vanguard or a Schwab. They make it really easy. And then you link your checking account and you set up an automatic deposit every time your paycheck comes in. So that it doesn’t end up in that spending bucket. You take it right off the top.
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