If you’ve put saving for retirement on the back burner, here is some good news: It’s never too late to start. And it’s never too early, either. 

There are reasons why retirement planning is a touchy subject. In Northwestern Mutual’s most recent Planning & Progress Study, an annual survey of national attitudes and behaviors about money, they found that 22% of Americans have less than $5,000 in retirement savings, and 15% have no savings at all. That’s actually an improvement from the previous year. 

But this isn’t about guilt trips or alarm bells. This is about starting or improving your retirement strategy so you will be financially set for the long term. 

While strategies will change depending on your situation, retirement planning is all about looking to the future. For that, there’s no better time than the present. 

Why it’s never too late 

If you’re in your 50s and don’t like what you see in your retirement account, consider these course-correcting steps. 

1. Make your 401(k) your savings priority. If your employer offers a 401(k) or 403 (b) plan, participate, or up your participation if you’re already involved. If there’s an employer matching contribution, try to contribute up to that amount. Matching contributions are meant to incentivize savings, so take advantage: It’s free money in your pocket (actually, in your retirement savings account). And because your contributions are pre-tax, you'll see additional benefits when tax season arrives. 
2. Take advantage of the IRS catch-up contribution. Believe it or not, the IRS is on your side, at least when it comes to your retirement. The annual limit for tax-free contributions to 401(k) and similar plans was raised to $19,500, and those over 50 can contribute an additional $6,500, up from $6,000 in 2019. Those 50 and older can also make an extra $1,000 tax-free IRA contribution on top of the $6,000 annual cap. See the IRS website for specific catch-up contribution details. 
3. Consider extending work and delaying Social Security. If you always envisioned retiring at a certain age — say 65 — it may be worth rethinking that. Start positioning yourself now for work you would enjoy doing for a few years after your current job. Retired workers are increasingly valued as consultants and mentors. If that interests you, lay the groundwork now. At the same time, consider delaying taking your Social Security benefits. Every year you delay until age 70, your benefits increase by 8%. If you do take on a “post-career” job, you may find that 8% ROI enticing and doable. 
4. Rethink your financial commitments. This may be difficult, especially when it involves those close to you. For example, you may have always intended to pay for your child’s college education. But, the truth is, your children have a lifetime to pay off (a reasonable amount of) student loans; your timeframe for retirement security is a lot shorter. Some more good news: There’s currently a lot of discussion about college affordability and free tuition, which could help make this decision easier. 

Why it’s never too early 

It’s tempting to think that younger generations have it “easier” when it comes to retirement savings. Time is certainly on your side if you’re in your 20s. But that luxury can also be a disadvantage if it leads to procrastination. Instead, keep these guidelines in mind. 

1. Get in the habit. Most of us are creatures of habit. The challenge is to develop more good ones than bad ones. If you get in the habit of saving for retirement early on, you’ll increase the chances that you’ll stick with it throughout your working life. As with older investors, take advantage of 401(k) plans and employer matching contributions. With your longer investment window, you’ll benefit from the compound interest — interest on top of interest — that can turn modest lifetime savings into a secure retirement nest egg: Annual savings of $4,500 over a 45-year career can turn into $1 million in retirement. With an employer match, you could save as little as $2,250 a year to reach that goal. 
2. Make it automatic. Use automatic payroll deduction to support your good habit: If you don’t see the money, you won’t miss it. At the same time, add to your retirement contributions as your salary increases, a benefit to your retirement and your tax bill. 
3. Reassess your investments. Regular, automated investing isn’t the same thing as neglected investing. Being a life-long investor means that your life circumstances will change, and your financial priorities and risk tolerance will change along with it. Set up regular intervals to make sure that the investments you have match your goals and situation. Consider engaging a financial advisor as your wealth increases. 
4. Resist temptation. One downside of investing early is that there will be more instances where you’ll be tempted to use your retirement savings for some other purpose. There may be severe cases where that becomes necessary. In all other cases, just say no. 

Why you should start now 

Because something made you read this post, and you’re older now than when you started reading it. 

Because you deserve a great life in retirement. 

Because it won’t be any easier tomorrow. 

If you need additional motivation, consider contacting an advisor who specializes in retirement planning. Like working with a personal trainer, the support of a professional can be what we need to get us to where we want to go. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

To paraphrase the immortal Yogi Berra, “It’s tough to make predictions, especially about the future.” 

Investing in your retirement requires you to not only predict the future but to make financial decisions based on those predictions. How can you make the most informed decisions about your long-term financial needs, regardless of your age or when you plan to retire? 

One common way is to use free online retirement calculator tools. Unfortunately, some of these tools are hosted by financial investment firms looking to promote their services. If you prefer to avoid that, use calculators provided by organizations like AARP. But even the best calculators have their drawbacks because, despite being a good way to get you thinking about what you need — and what you might need to do differently now to get there — they’re based on general data and the law of averages, not on you. 

To get a better sense of your retirement, go beyond the numbers and get to the fundamentals. 

Focus on the constants 

You may not know everything about what you’ll need in retirement, but you’ll need to cover the basics, so start there. 

• Housing. Here’s where knowing your preferences can help you get more specific with your projections. If you’re a homeowner who plans to age in place, will your mortgage be paid off when you retire? If so, that’s great; just remember to account for ongoing maintenance, insurance costs, and property taxes. Consider modifying your home as necessary now while you have a regular income, or downsizing to a more manageable — and less expensive — house. 

Retirement communities are another option. Choices range from individual apartment living to 24/7 care in a skilled nursing setting, and costs vary just as widely. If this is your picture of retirement, price options in your desired location. In a best-case scenario, the money you get from selling your home can cover a significant portion of your future housing costs. 

• Healthcare. According to the Employee Benefit Research Institute, health spending constitutes 8% of expenses for those aged 50 to 64, a figure that rises to 11% for those over 75. It’s essential to account for that increased spending. If you’re currently enrolled in a plan through work, find out what happens when you retire. You may have options to continue with the group plan, or you may have worked at your job long enough to become vested in certain benefits. 

All Americans are eligible for Medicare when they turn 65. Unless you’re getting Social Security, you need to enroll at that age. Medicare will cover about half of your healthcare costs. You’ll need to supplement the plan with private coverage or with the public Part C or Part D. Research the program at medicare.gov and explore the available options and costs. 

Factor in geography 

Certain parts of the country will be more expensive retirement destinations than others. You’ll need more money to retire in San Francisco than you will in Duluth. 

There are factors to consider beyond the obvious cost-of-living items like housing. For example, some states tax Social Security benefits. Check out property taxes and see if any programs exist for homeowners over 65. If you have a sizable estate, be aware that six states currently collect an inheritance tax and 12 collect estate taxes. Because some exemptions apply, it’s worth researching your intended location to learn how these costs could impact you and your family. 

Play the percentages 

Let’s face it: One of the reasons retirement planning is difficult to talk about is because it forces us to think about the other inevitable thing in life besides taxes. But having a reasonable sense of your life expectancy can help you avoid the two major retirement nightmares — running out of money or cutting corners unnecessarily. 

The good news is that people who reach retirement age can expect to live longer. According to the Social Security Administration, men and women who reach age 65 live to ages 84 and 86.5, respectively. With one in three 65-year-olds living past 90 — and one in seven past 95 — a third of your life could be in retirement. 

Balance those odds with your personal health and family history. If you’re married, talk with your spouse about their expectations. If you or your spouse are dealing with an ongoing medical condition, you may want to include long-term care insurance in your retirement plan. 

The good news is, you don’t have to do all this planning alone. Consider talking with a financial advisor who has expertise in retirement planning. After all, these are meant to be your golden years, and you’ve worked hard to make them that way. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

However, while the benefits you’ve earned are guaranteed, not everyone gets the same amount — and you can make choices that either increase or decrease how much you receive and when you receive it. 

To make good choices with your Social Security, you first need to understand how Social Security works. Specifically, it’s important to know that the benefits are progressive. That means, if you’ve earned less than the national average throughout your career, you will have more of your earnings replaced by Social Security. If you’ve earned more than the national average, you’ll have less replaced. In general, lower-wage workers can expect to have about half of their earnings replaced, while higher-wage workers can expect to have a quarter or less of their earnings replaced. 

As of 2020, the average monthly benefit was around $1,503. A cost-of-living adjustment routinely raises benefit payments by small amounts, with payments rising by 2.8% (an average of $40 more a month) heading into 2019 and 1.6% (an average of $24 more a month) heading into 2020. You can expect the average monthly benefit to be higher when you retire than it is now, but the exact amount you receive will be determined by more than cost-of-living increases and your lifetime earnings. It will also be determined by when you start claiming benefits — and that’s where the decision-making comes into play. 

Claiming Benefits 

Early If you want, you can start claiming your Social Security benefits as early as age 62. For some, this may be a necessity due to life circumstances. But, for most, claiming early is not a good idea. If you claim at 62, you’ll only receive 75% of your monthly benefit, and this percentage will never go up, no matter how long you live. The only increases you’ll receive will be cost-of-living adjustments. To avoid this penalty and receive 100% of your monthly benefit, you’ll need to wait until you’re older. 

Receiving 100% of Your Monthly Benefit 

You may have heard that the retirement age is 65. While you’re certainly free to retire whenever you choose, 65 is no longer the age when you can claim 100% of your monthly benefit — and hasn’t been for a while. 

For those born between 1943–1954, the age at which they can claim 100% of their monthly benefits is 66. The last of this group will reach that age in 2020. After that, the age at which someone can claim 100% of their monthly benefit will slowly rise, eventually hitting age 67 for those born in 1960 or later. 

Will that age rise again? That’s impossible to predict, but it could definitely happen. So, if you were born after 1960, you’ll want to pay attention to any future changes. 

Deferring Benefits to Age 70 

For many, holding off on claiming Social Security until age 70 is a smart idea. That’s because, for each year you wait beyond the age you can receive 100% of your benefits, you’ll get an extra 8% per year for the rest of your life. 

This is a great benefit. What other way can you increase your guaranteed yearly retirement earnings by 24%–32%? To see how this deferment can add up for you, check out the Social Security Administration’s benefits calculator. 

The only risk in deferment is the possibility that you won’t live until age 70, or won’t live long enough past 70 to make the increase in yearly benefits a net gain. Currently, the average life expectancy for a U.S. woman is 81.4 and the average for a man is 76.3. However, those life expectancies are calculated at birth and include those who die young. According to the Social Security Administration, a man who turns 65 today is likely to live until 84, while a woman who turns 65 today is likely to live until 86. 

When determining if deferring your benefits makes sense, you’ll want to calculate your break-even date (i.e., the date when the total amount you’ll earn by deferring surpasses the total amount you would have earned if you started claiming your benefit earlier). Then, consider your health, family history, and any other factor that might affect your longevity. For most who reach retirement age, deferring pays off in the long run. 

Considerations for Married Couples 

If you’re married, your spouse’s benefits can become your benefits on the occasion of their death. While considering the death of a spouse is not pleasant, it is an important part of a strong social security claiming strategy. 

As long as both you and your spouse are alive and of retirement age, you’ll each collect your own individual Social Security benefit, beginning at the age of your choosing. If one of you passes away, the surviving spouse will receive the highest of the two monthly benefits. Meaning, if a wife is receiving more in Social Security than her husband, the husband will start receiving her benefit (and his will stop) if she dies. If one spouse never qualified for any benefit of their own, they will begin receiving half of their spouse’s benefit on the occasion of the spouse’s death. 

When deciding on when to start claiming your Social Security, you should take your spouse’s Social Security benefit into consideration. For many couples, it makes sense to defer the benefit of the spouse who will receive a higher amount. That way, whoever lives longest will be guaranteed the deferment bonus for the rest of their lives. 

Of course, making these choices aren’t necessarily easy. And while the Social Security Administration can answer a lot of questions, they are not allowed to help you put together a strategy to maximize your lifetime benefits. For that, you may want to consider a financial advisor with retirement earnings expertise. Social Security is too important to ignore. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

While philanthropy appears to be simple — you identify the organizations and causes you want to support, determine what you can afford to give, and donate — professionals who specialize in the field can take your giving to the next level. 

Here are five ways that financial advisors and professionals with philanthropic expertise add value. 

1. They can maximize your philanthropy. 

The rules, regulations, and tax codes related to charitable giving are anything but simple. And, because these can vary at the state level, advisors who understand the ins and outs of your particular situation can help you maximize your philanthropy. 

For example, the Tax Cuts and Jobs Act of 2018 changed the allowable standard deduction and charitable giving deductions. Because the bill represented a significant overhaul of the 1986 tax code, it’s not surprising that many of its features were oversimplified in reports, with some observers suggesting that charitable donations were no longer tax deductible. In reality, the bill increased allowable deductions at certain levels. 

There are also strategies such as “bunching” that an informed advisor can help you understand and utilize, if appropriate — all of which can help you increase the impact of your giving. 

2. They can help you define your goals. 

Advisors who counsel clients on philanthropy follow the same process as any financial advisor. 

They begin by gaining an understanding of your overall goals and objectives. 

• What are your priorities in giving? 
• How do you want your giving to change over time? 
• What do you want your philanthropic legacy to be? 

Thinking of charitable giving strategically and in the long-term helps you define your goals in a way that annual giving does not. Equally important, your advisor works with you to develop and implement a giving plan to realize those goals. 

3. They are connected to the charitable community. 

Advisors who specialize in giving are connected to the charitable community. Many advise nonprofit organizations on financial matters, so they can be valuable resources in directing you to effective organizations that align with your interests. 

They will also be familiar with like-minded donors who can broaden your community network. 

4. They can incorporate giving into your larger financial planning. 

Advisors with expertise in philanthropy can help you incorporate giving into your overall financial planning. 

Do you want to keep giving during your retirement? Do you want to include philanthropy in your business exit planning, estate planning, or legacy planning? 

For help with these and other questions, you’ll want to work with an advisor who understands how to translate your goals into realities. 

5. They can support your big ideas. 

If you’re in the fortunate position to set up a family foundation, you will definitely need the skills of an advisor with experience in long-term charitable planning. 

Family foundations not only leave a personal and family legacy — often in perpetuity — but also bring your family together during the planning and implementation phases. This creates a life-long-and-beyond connection that spans current and future generations. 

Whatever your philanthropic vision, a financial advisor or professional with specialized education and experience can make a difference in how you make a difference. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

While few of us are in that position, there’s no reason to exclude charitable giving from our estate planning. And yet, many of us are doing just that. Although 60% of U.S. households donate to charity every year, 86% of charitable donations made at death come from the wealthiest 1.4%. Put another way: we give during our lifetime, but we don’t think to give as part of our legacy. 

There are reasons for this disconnect. To begin with, we don’t like to think about death, so a surprising number of us avoid estate planning completely. Caring.com’s 2020 Estate Planning and Wills Study found that the number of adult Americans who have a will or estate plan has dropped 25% since 2017, and procrastination and avoidance are likely contributors to that trend. 

Here are some insights on how to make sure you include your philanthropic inclinations in your estate planning. 

1. You are passing on your values, not just your money 

Consider this definition of legacy: “something that someone has achieved that continues to exist after they stop working or die.” 

That perspective changes the entire conversation around legacy giving. It shifts estate planning from a somber realization of the end of life to a positive way to leave lasting memories behind. 

What charities do you support now? What organizations and causes do you think will be most important and impactful for the people you care about — your children, their children, your loved ones? 

Asking and answering those questions can give you real insight into who you are and what you value, regardless of how much money you have. 

2. Your support will encourage others to give 

Charitable legacy planning can provide the organizations you care about with additional support, similar to challenge grants during fundraising drives. Nonprofits have created legacy societies to recognize, celebrate, and publicize the names of individuals who included their organizations in their estate planning. Your support becomes a public declaration of your belief in an organization’s mission and vision, and can inspire others to take action. 

Legacy societies also connect you to like-minded people and allow you to appreciate the impact of your philanthropy. For example, the Kennedy Center Legacy Society, whose mission is “to promote dignity, empowerment, and opportunity for all individuals with disabilities and special needs,” lists its members on its website and publications and invites supporters to an annual endowment event. Legacy planning can enrich your life now. 

Studies also show that people who are intentional about charitable legacy planning give, on average, three times the amount they’ve contributed throughout their lifetime, making it one of the most impactful decisions you can make. 

3. Charitable legacy planning brings families together 

Include your family early on in your charitable legacy planning discussions. That will avoid any future surprises and, more importantly, reinforce your belief in the importance of private giving. 

These discussions can also bring us closer together. As family units become increasingly diverse and nontraditional, we can't assume that our current priorities and future intentions are understood by all. 

Sharing your thoughts and motivations about your legacy plans can open rich avenues of dialogue. Use sources like Charity Navigator to ensure that the organizations you are considering have a track record of maximizing gifts. 

4. Legacy planning can be simple 

You don’t need fancy legal or financial instruments to include charitable giving in your estate planning. Unless you have complicated and extended assets, your contribution can be made through traditional means, including: 

• Wills 
• Trusts 
• Retirement funds 
• Life insurance policies 
• Physical assets 

There are tax implications that can maximize the gifts you leave for all of your beneficiaries. For example, assets from an IRA or 401(k) plan are subject to income tax when bequeathed to an individual, but are tax-exempt when left to a 501(c)(3) charity. Engaging legal and financial professionals who have the credentials and experience in estate planning is often the best way to understand which options are best for you, your family, and the causes you care about. 

Why not maximize the impact you can have, now and in the future? 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.