Retirement Planning – Just Starting to Save

Age 18-35: During this stage, time truly is on your side…

(Mid 40s - It's not too late to develop a plan.
Over 35 - See next life stage)

1. Establish a Budget
2. Establish an Emergency Fund
3. Determine how much you need for Retirement
4. Take full Advantage of your Employer’s Contributions to your 401(k)
5. Contribute to an IRA

Establish a Budget

Budgeting is the first step towards financial freedom. Use our calculator to figure out your spending habits.

Establish an Emergency Fund

Many people set aside 3 to 6 months worth of income or expenses. To accomplish this goal, an Interest Bearing Savings, Checking, or Money Market account can be used.

Determine how much you need for Retirement

Retirement will take a combination of money coming from:

• Employer’s Retirement Plan
• Your IRAs
• Company’s Pension Plan
• Social Security
  

Start as young as you can, with whatever you can, even if you are simply setting aside pocket change.

Try to set aside 10% of your income. As a general rule of thumb, target a retirement income of roughly 70% to 80% of the amount you are living on in the months before you retire.

Since time is on your side, you may be able to ride out market fluctuations. Consider a tolerance for risk that is adjusted for a longer timeline.

Take full advantage of your employer's retirement contributions

If your employer matches your contributions, this is free money! It's a good idea to take it.

Make regular investing a habit. Utilize payroll deduction to invest in your 401(k) and other employer sponsored retirement plans.

Contribute to an IRA

Having trouble figuring out what to contribute to on a limited budget? Have you contributed up to the match from your employer sponsored plan? If so, consider funding your Roth or Traditional IRA.

Determine which IRA is appropriate Roth or Traditional?

Note: Ideas listed above are only suggestions. See a State Farm agent for help with your personalized retirement plan.