• If the thought of planning for retirement overwhelms you, you are not alone. There are many complex issues to consider when it comes to retirement, and what works for one person may not be an option for another.  

While thinking about this subject, it occurred to me that the issues involved and the decisions to make concerning retirement planning are substantially different for young adults than they are for older adults. Since those two groups are on opposite ends of the retirement planning spectrum, so to speak, here are a few things for each of them to consider:

Young Adults

• Saving for retirement is a big deal!
• You must make it a priority.
• Don’t sacrifice retirement savings for something else, (such as saving for your kids’ college).
• You don’t get a “second chance” to do it over.

• How much should you contribute to your retirement account?
• At a minimum, you should contribute enough of a percentage of your salary to qualify for your employer’s match. The amount your employer matches is free money for you!
• Consider contributing more than just the amount needed to get your employer’s match. Since everyone’s situation is different, there’s no “one size fits all” magic answer. Naturally, the more you save, the better. Contributing at least 10% to your retirement plan is what many financial advisors recommend.   

• Should you contribute pre-tax or after-tax dollars? Put another way, should you utilize the Roth option within your 401(k), a Roth IRA, etc., or should you go the traditional route in which you contribute pre-tax dollars and realize the tax savings now instead of later? You can find advocates for both sides of this argument. My personal feelings are that you should do some of both. I look at it as another form of diversification.
• The miracle of compounding:
• If a 20 year old put $50 per month into an account earning* 8%, at age 65 that account would have grown to over $265,000. If that account earned a return of 10%, at age 65 it would have grown to over $528,000.
• The lessons to be learned:
• Save early (start young)
• Little things make a difference, such as the rate of return, the number of years, etc.
• Be patient! Good things come to those who wait.
  
  
• Social Security
• What will the normal, full retirement age be by the time you’re ready to retire?
• How will the social security program, and the benefits it pays, have changed by the time you reach retirement age?
• Don’t rely (only) upon social security to support you in retirement.
  
  
• Beneficiaries
• Don’t forget to name a beneficiary, or beneficiaries, for your retirement accounts.
• Don’t forget to update/change your beneficiary designations when life events happen, i.e. deaths, births, divorces, etc.

Older Adults

• How much is enough? How much do you need to have saved for retirement?
  
  
• At what age are you going to retire?
  
  
• When will you claim social security benefits?
• By claiming benefits earlier, you’ll receive them for a longer period of time. On the other hand, your monthly benefits will increase by approximately 8% for each year you delay taking them.
  
  
• Are you going to continue to work part-time?
• Part-time employment will certainly help financially.
• It will also benefit you by keeping you active and engaged.
  
  
• Will your living expenses increase or decrease in retirement?
• Are you going to travel?
• Most people’s health care costs increase as they age.
• Do you have long-term care insurance?
  
  
• Are your debts paid off?
  
  
• What is your life expectancy? What is your family history? What is your health situation?
  
  
• Do you have an estate plan in place? (Yes, this is part of your retirement planning.)
• If something happens to you, will your spouse be taken care of?

• Beneficiaries
  • Don’t forget to name a beneficiary, or beneficiaries, for your retirement accounts.
  • Don’t forget to update/change your beneficiary designations when life events happen, i.e. deaths, births, divorces, etc.
  • Do you have a will, and is it up to date?
  • What about medical directives, power of attorney, living wills, etc.?

For more information on how First National Bank and Trust Company can help you plan for retirement, call 217-935-2148.

*Investment products are: Not a Deposit, Not FDIC Insured, Not Insured by any Federal Government Agency, Not Guaranteed by the Bank, May Go Down in Value

About First National Bank and Trust Co: First National Bank & Trust Company is a community bank located in Clinton, Illinois. Dedicated to community prosperity, the bank was chartered in 1872 under the name DeWitt County National Bank. The name was changed First National Bank and Trust Company in 1974, and was acquired by TS Banking Group in 2017. With $170 million in assets, First National Bank is dedicated to community reinvestment and gives 10% of its net income back to the community. For more information visit firstnbtc.com.

Matt Riley was named Fiduciary Officer, VP, for First National Bank and Trust Company in January 2019. Riley has four years of experience in risk analysis, serving most recently as a Risk and Compliance Analyst at State Farm Bank in Bloomington, Ill. As a Fiduciary Officer, Riley will manage First National Bank’s trust portfolio while helping clients find new ways to meet their prosperity goals. He will focus on growing the portfolio and working to establish relationships with referral sources.