Estate Planning and Tax Lawyer Blog

As baby boomers are nearing retirement age, they are finding themselves financially unprepared for the future. On average, a household headed by someone 60 to 62 has less than a fourth of what is needed for their retirement. Of those households nearing retirement age, about 60% rely at least in part on 401(k) plans. However, 401(k) plans should be used as a retirement supplement, not as a full retirement plan, especially for baby boomers who were not exposed to them for long enough. Those who are using 401(k)s as their retirement are not contributing enough each year to obtain the amount of savings that will be needed for retirement. If you have fallen behind on saving for retirement, now is the time to save more. Another way to help with retirement is to delay taking Social Security. If a person entitled to benefits at age 66 starts to withdraw at 62, they will only receive 75% of their benefits. But if that person was to wait until age 70, they would receive 32% more than their full benefits. Older individuals are also able to contribute more to their 401(k)s without it being taxed. Rising health care costs also affect how much an individual should save for retirement. Some advisors suggest that 85% or your working income is needed in retirement, while others say 100% needed. With the rising health care costs and unstable housing market, it may be advisable to save 100%. The worst thing that could happen is that you outlive your retirement savings. The sooner you start saving for retirement, the better you will be.

To read more on this article, visit 401k Planning: Tips to Keep Your Retirement Plan on Track.