The three pillars of retirement planning in NJ are also known as the “three-legged stool,” an old phrase that financial planners once used to describe the most common sources of retirement income: Social Security, pensions and personal savings. However, things have changed over the years, so the three-legged stool looks a bit different from what you may remember.
Let’s learn more about these three pillars and how they will affect your retirement planning.
Pillar 1: Pensions - 401(k) Plans
For younger workers, the pension leg has been mostly replaced by 401(k) plans. These plans are some of the best tools you have for your retirement. They allow you to contribute a portion of your wages to individual accounts. Some companies will even match the employee contribution up to a certain percentage.
Pillar 2: Social Security
The 2021 Annual Report of the Social Security Board of Trustees warned that Social Security could run dry in two decades. However, this is more of a myth than reality. As long as employers pay payroll taxes, Social Security will not run out.
That being said, Social Security is only meant to replace about 40 percent of your income. This means that you can’t rely on Social Security entirely to cover your expenses. To determine your Social Security benefits, review your account online. You can get your full benefits at 66 or 67.
Pillar 3: Personal Savings
The third leg is personal savings. Recessions and stagnant wages have made it difficult to save, but it’s more important than ever for people to do this. Some of the best ways to save for retirement include IRAs and annuities. The earlier you start, the better, as this will give you more time to save. And, you won’t have to contribute as much.
Retirement Financial Services in New Jersey
The government has considered possible options to help Americans save more for retirement, but ultimately, the future rests on your shoulders. By maximizing all three pillars - contributing to your 401(k) plan, maximizing your Social Security benefits and creating a savings account - you can prepare yourself for retirement.
Because all of this can be confusing, the first step is to speak with a financial advisor in New Jersey. Your financial advisor can help with all aspects of retirement planning, including Social Security and Medicare. For a free consultation, speak with Leonard Financial Solutions today!
Let’s learn more about these three pillars and how they will affect your retirement planning.
Pillar 1: Pensions - 401(k) Plans
For younger workers, the pension leg has been mostly replaced by 401(k) plans. These plans are some of the best tools you have for your retirement. They allow you to contribute a portion of your wages to individual accounts. Some companies will even match the employee contribution up to a certain percentage.
Pillar 2: Social Security
The 2021 Annual Report of the Social Security Board of Trustees warned that Social Security could run dry in two decades. However, this is more of a myth than reality. As long as employers pay payroll taxes, Social Security will not run out.
That being said, Social Security is only meant to replace about 40 percent of your income. This means that you can’t rely on Social Security entirely to cover your expenses. To determine your Social Security benefits, review your account online. You can get your full benefits at 66 or 67.
Pillar 3: Personal Savings
The third leg is personal savings. Recessions and stagnant wages have made it difficult to save, but it’s more important than ever for people to do this. Some of the best ways to save for retirement include IRAs and annuities. The earlier you start, the better, as this will give you more time to save. And, you won’t have to contribute as much.
Retirement Financial Services in New Jersey
The government has considered possible options to help Americans save more for retirement, but ultimately, the future rests on your shoulders. By maximizing all three pillars - contributing to your 401(k) plan, maximizing your Social Security benefits and creating a savings account - you can prepare yourself for retirement.
Because all of this can be confusing, the first step is to speak with a financial advisor in New Jersey. Your financial advisor can help with all aspects of retirement planning, including Social Security and Medicare. For a free consultation, speak with Leonard Financial Solutions today!
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