According to a 2019 Federal Reserve Survey, the median retirement savings of Americans between the ages of 55 and 64 is roughly $134,000. However, nowadays, that amount may not be enough to last 10-20 years. Planning for the long term is essential. We created this article to explain how to build an IRA account and why it differs from a 401K. Continue reading to learn more.

When should I start saving for retirement?  

Most people view retirement planning as a secondary need. But, if you were to ask a financial planner, they would disagree. Regardless of age, acquiring a large enough nest egg will take time. Thus, it’s beneficial to start saving for retirement as soon as possible. 

Where should I keep my retirement savings? 

The most common retirement accounts are the 401(k) and the Individual Retirement Arrangement (IRA). These accounts have advantages over regular deposit accounts, usually because interest yields at a higher percentage.

A 401(k) is an account set up by your employer where you contribute pretax income. At the same time, most employers will match contributions up to a predetermined percentage. Your investments grow tax-deferred due to special incentive programs from the federal government. You then pay your deferred taxes as you withdraw your money in retirement. 

With an IRA account, you are in control of all contributions. Your employer does not set it up, nor do they maintain it. There are different types of IRAs, and consumers should research which would benefit them most. 

Regardless, when saving for retirement, make sure to look for accounts that allow:

– Additional deposits or recurring contributions
– high earnings from annual percentage yields¹
– Access funds if needed in case of an emergency²
– NCUA or FDIC federal insurance 

How much should I save for retirement? 

Unfortunately, the answer to this question isn’t clear-cut. People often reference the 4% rule when planning a target number. Retirees can withdraw 4% from their total savings and continue to live comfortably, as long as that 4% covers all their expenses for the first year. There are many general retirement calculators on the internet; however, please remember that this is just a suggested figure. It does not account for lifestyle changes or emergencies. Additionally, it is better to consult a financial professional to get a personalized review of your situation.

Enhance your retirement future

If you find saving for retirement daunting and confusing, don’t worry, you’re not alone. Many people feel the same way. At Achieva Credit Union, we have a team of experts who can help you get on the path to a comfortable retirement by developing a plan and setting up the accounts you need.

Enhance your retirement future by viewing our IRA account options page. Members can also schedule an appointment or speak to a representative at 800.593.2274.

 

 

 

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¹ APY=Annual Percentage Yield. The 42-Month Promotional Certificate is available to individuals who live or work in our 15-county area of membership, or a company or association that is based in our area of membership. County service area: Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Lee, Manatee, Monroe, Pasco, Pinellas, Sarasota. This CD contains a special add-on feature which allows you to make subsequent deposits (“add-ons”) to your 42-month certificate at any time prior to maturity. Add-ons may be made as frequently as desired, however deposits must be made in increments of no less than $50 and subsequent deposits will not increase the APY. The total account add-on amount may not exceed $1,000,000 per certificate term. Subsequent add-ons to the 42-Month Promotional Certificate will not be eligible for the APY at the next tier. This special add-on feature is only applicable during the 42-month term of the promotional certificate and will not apply after maturity, even when account proceeds roll into another Credit Union certificate unless otherwise disclosed at renewal. Early withdrawal penalties apply based on the total amount on deposit at the time of withdrawal. Fees may reduce earnings. Refer to the Rate Schedule and Truth in Savings Disclosure for complete details. Programs, rates, terms, conditions and services are subject to change without notice. Federally insured by NCUA. ² Early CD redemption penalties may apply.