Magazine recently ran an article on how much you should have in retirement
savings based upon your age.
The article suggested the following retirement savings amounts at certain ages
in order to live a lifestyle in retirement comparable to your current lifestyle.
It suggested you should have the following amounts in your retirement savings
by the following age ranges:
Age 35-45 1.5 times your annual salary
Age 45-55 3 times your annual salary
times your annual salary.
This makes sense if you do not have a pension but what about those
who do have pensions? How much should you save on top of your pension in order
to live a comparable lifestyle to your present one when you retire?
The answer may be a little frustrating without some help.
Every state has different pension plans and different rules around Social
Security. In an ideal world, you could simply figure out what your pension will
pay you in retirement, add Social Security, and then compare that to your
salary today. In reality, pensions can be confusing and planning your
retirement can be overwhelming.
Here are some things that can help you think through how much
you will need to save:
1. Know your pension benefit. Most
states have an online calculator or a help line to call so you can estimate
what your benefit will be. If you are confused, check with your local NEA
Valuebuilder® representative. Your Valuebuilder representative has
planning software that can determine your pension benefits and calculate any
2. Take a stand on the future. A study done this year by the Manhattan
Institute for Policy Research reported that underfunding of teacher pensions
may be triple what has been reported by the states.
Social Security’s underfunding has been widely publicized in recent years. The
point is not to panic but to take a stand on what you believe will happen to
your state pension and to Social Security. Get informed and talk with a
professional financial advisor about your pension and Social Security. You may
choose to trust in these retirement vehicles and do nothing. On the other hand,
you may choose to prepare for the worst and reap the benefits of your caution
when you retire. In addition, if you do have a Social Security benefit, consider
when you will be taking it. Delaying payments by a few years can make a big
difference in your income.
3. Picture yourself in retirement. How
much you need depends significantly upon what you want to do, where you want to
go, and the kind of lifestyle you want to lead. Perhaps the most important
question is, “How does my picture of the future compare to my paycheck today?”
Does your lifestyle today include vacations oversees? Trips to visit children
and grandchildren? Hobbies—such as golf—that can be expensive? If so, then
today’s income will likely cover tomorrow’s lifestyle. On the other hand, if
your pension will pay 75% of your current paycheck, then can you really afford
to live the lifestyle you want on 25% less income? If not, then you will
probably need to contribute to a supplemental retirement plan that will get you
closer to 100% of your pre-retirement paycheck.
4. Pay yourself first. A little sacrifice
now can reap big benefits in the future. If you are not able to take a pay cut
in retirement, then consider putting away a little extra now in order to
supplement your pension. A small amount every paycheck over a number of years
may fill the gap without having to make huge sacrifices.
How much do
you really need in retirement savings? It’s the answer we hate to hear: “It
depends.” There are a lot of factors
that go into your number. A financial professional can help you more clearly
define the number that’s right for you. If you are not sure and want help, then
talk to your local NEA Valuebuilder representative. At the NEA Valuebuilder Advisor-Assisted Web page [https://nea.securitybenefit.com/neavaluebuilder/advisorassisted.htm], our “representative locator” will
quickly provide contact information for trained representatives who can help you
with retirement planning and making difficult decisions that affect your
To find your
representative click here. Take a look right now!
(If you have
trouble with the link, copy the following web address into your browser, http://nea.securitybenefit.com/neavaluebuilder/advisorassisted.htm.)
You should carefully
consider the investment objectives, risks, and charges and expenses of the
mutual funds and variable annuities available under the NEA Valuebuilder
Program before investing. You may obtain a prospectus that contains this and
other information about the mutual funds and variable annuities by calling our National Service Center
at 1-800-NEA-VALU (632-8258). You should read the prospectus carefully before
investing. Investing in variable annuities and mutual funds involves risk and
there is no guarantee of investment results.
Valuebuilder Program provides investment products (the “NEA Valuebuilder
products”) in connection with retirement plans sponsored by school districts
and other employers of NEA members and individual retirement accounts
established by NEA members. Security Distributors, Inc. and certain of its
affiliates (collectively “Security Benefit”) make the NEA Valuebuilder products
available under this program pursuant to an agreement with NEA’s wholly-owned
subsidiary, NEA’s Member Benefits Corporation (“MBC”). Security Benefit has the exclusive right to
offer the NEA Valuebuilder products under the program, and MBC generally may
not enter into arrangements with other providers of similar investment programs
or otherwise promote to NEA members or their employers any investment products
that compete with the NEA Valuebuilder products. MBC promotes the program to NEA members and
their employers and provides certain services in connection with the program.
Security Benefit pays an annual fee to MBC based in part on the average assets
invested in the NEA Valuebuilder products under the agreement. You may wish to
take into account this agreement and arrangement, including any fees paid, when
considering and evaluating any communications relating to the NEA Valuebuilder
products. NEA and MBC are not affiliated
with Security Benefit. Neither NEA nor MBC is a registered broker-dealer. All
securities brokerage services are performed exclusively by your sales
representative’s broker-dealer and not by NEA or MBC.
Valuebuilder Variable Annuity TSA, Contract Form No. V6029, also includes a
Fixed Account. The NEA Valuebuilder Variable Annuity TSA is distributed by
Security Distributors, Inc. and is issued by Security Benefit Life Insurance
Company (SBL). The NEA Valuebuilder
403(b)(7) is a Custodial Account under §403(b)(7) of the Internal Revenue Code.
The NEA Valuebuilder Mutual Fund 457 is a Trust Account under §457 of the
Internal Revenue Code. The NEA Valuebuilder IRA is an IRA Custodial Account
under §408(a) of the Internal Revenue Code.
long-term investments suitable for retirement.
Distributors, Inc. is a subsidiary of SBL and SBL is wholly owned by Security
Benefit Corporation (“Security Benefit”).