Are You Retirement Ready?
- Ayhana Austin
- Jul 17
- 3 min read
Updated: Aug 26
Retirement should be a time of rest, not financial stress, but for millions of Americans, that may not be the case. According to Ramsey Solutions, 37% of Americans carry more credit card debt than they have saved for retirement, and nearly half of working adults haven’t even calculated how much they’ll need when that day comes. Only 34% of non-retired people feel confident they’re on track, and just 27% currently use a financial advisor to help guide them. With uncertainty on the rise, it’s more important than ever to take control of your retirement future. Here’s what you need to know and do to get there.
1. Know Your Target: How Much Will You Need to Retire?
Financial advisors commonly recommend planning to replace about 70% of your pre-retirement income to maintain your lifestyle. While Social Security benefits may replace around 40% of that, the rest will likely need to come from your personal savings unless you choose to work during retirement. Keep in mind: working while receiving benefits can increase or decrease your benefit amount, depending on your income and situation. Start with a plan. Use tools like NerdWallet’s Retirement Calculator to estimate what you’ll need based on your goals, savings, and income.
2. Start Early and Stay Consistent
The earlier you start saving, the more time your money has to grow. Compound interest is one of the most powerful tools for building long-term wealth. Even if you’re starting later, consistency is key. Contributing regularly, even small amounts, can make a big difference over time.
3. Maximize Your Retirement Accounts
Take full advantage of both employer-sponsored 401(k) plans and Individual Retirement Accounts (IRAs).
401(k) Plans:
· Offered through your employer
· Many companies match contributions:
o 50% contribution match up to a percentage of your salary, usually 4% or 6%
o 100% contribution match up to a percentage of your salary, usually 4% or 6%
o Tiered Match with different match rates at different contribution levels
· Consider whether to roll over your 401(k) if you change jobs. Depending on interest rates, it may or may not be beneficial.
IRAs:
· Available as Traditional or Roth IRAs:
o Roth IRA: Contributions are taxed now, but distributions in retirement are tax-free.
o Traditional IRA: Contributions are tax-deferred now, but taxed when withdrawn.
· Choosing between the two depends on your current vs. expected future tax rate. With taxes likely to rise over time, paying taxes now (Roth) may be a smarter move for many.
4. Understand Your Social Security Benefits
Social Security is a critical piece of the retirement puzzle, but it’s not one-size-fits-all. Eligibility is based on age, ability to work, loss of a spouse or parent (for a child) and difficulty paying for essential items such as a home or food. Benefit amounts depend on your age, lifetime earnings, and work history. The highest 35 earning years are used in calculating your benefit, and wages are only counted up to $176,100 annually.
§ 💡 Use the SSA’s Quick Calculator and review your earnings record to ensure accuracy. Factors like Medicare Part B, outstanding taxes, or continuing to work can reduce or impact your benefit. To learn more, visit Plan for Retirement | SSA.
5. Golden Rule: Don’t Touch Your Retirement Savings!
It’s tempting to dip into your 401(k) or IRA for emergencies or big expenses but resist the urge. Early withdrawals come with penalties, taxes, and long-term losses that can derail your future security. Treat your retirement savings as sacred and protect it at all costs.
Final Thoughts
Retirement may seem far away, but preparing now gives you control, peace of mind, and the freedom to retire with dignity. Whether you’re in your 20s or your 60s, it’s never too early or too late to make a plan. Remember: the most important step is the one you take today.
Social Security Administration Resources:
This is such great information!✅📚