2025 retirement playbook: Experts provide tips for saving at any age – Yahoo Finance
A 2024 survey by MorningStar found that 45% of seniors who retire at the age of 65 can run out of money during their retirement. The number of workers leaving at 62 will rise to 54%.
The study concluded that if more workers access and use workplace investment plans, they could prevent a crisis.
The good news is whether you're just starting a career or already leaving the workforce, there are ways to maximize your savings and build a safer future.
Yahoo Finance spoke with several retired experts who shared the best strategies for building retirement nest eggs at every stage.
Resignation can be a challenging goal for young professionals in their 20s and 30s. They often face student loans and other forms of debt repayment.
According to Fidelity Investments, Gen Z workers saved an average of $6,500 for retirement, while millennials saved an average of $24,000.
BlackRock's head of global retirement solutions, Nick Nefaus said Gen Z “received a note” after seeing his parents struggle to save for retirement. A BlackRock survey found that 10th generation Z 10th generation workers reported that more than seven people felt they would retire.
Financial advisors and experts agree that there is no “perfect” nest egg number, but there are general guidelines to ensure you are ready to retire.
Nefouse recommended that people who have just started donate between 5% and 6% of their salary each year.
“People often ask how much they should save. My answer is usually 'more',” Nefaus told Yahoo Finance. “But… start with the small ones – 5%, 6%. Make sure you save it in that 401(k) match, and try to increase it by about 1-2 percentage points each year to reach a higher level.”
The first step for many young workers is to enroll in the employer's 401(k) match program, if offered.
“If you have access to a 401(k) plan, you usually have access to corporate games,” Nefouse said. “A corporate match is giving money to an employer if they're saving, so we always want to start with a 401(k) plan and save money on that match.”
After maxing out your 401(k) match, you can explore other retirement savings accounts.
“Once you do it, it's when you want to start looking at something like a Ross IRA,” continued Nefaus. “And if you are at the maximum of Roth IRA, there may be an income tax reason you might want to consider traditions. [IRA]. But always start with that 401(k). ”
read more: Resignation Plan: Step-by-Step Guide
By the time they are in their 40s and 50s, most workers are becoming more realistic about the types of lifestyles they can achieve when they retire.
One expert said it's the best time to look into your priorities by categorizing “needs, desires, and hopes.”
“Your needs will definitely be your typical retirement savings,” Andrew Fincher, financial advisor for VLP, told Yahoo Finance. He also recommended that medical expenses from Medicare or private insurance be taken into consideration as part of this calculation.
Fincher then advised that he took into consideration lifestyle goals, including taking leave.
“People… I'd probably want to travel abroad,” Fincher said. “Maybe it's just on the lake on the road. Either way, there's some cost associated with it.”
Michael Jordan (Sam Greenwood/Getty Images) during the Pro Am before the 2007 Wacovia Championship, held at the Quazul Hollow Country Club in Charlotte, North Carolina on May 2, 2007 ・Sam Green Wood through Getty Images
Finally, people established in their careers may be thinking about long-term wishes, such as paying for their children's weddings or making charity contributions. “We classify it knowing you need to start with your needs and follow your path [to] Look at what the potential for success is for that,” Fincher said.
For those who have fallen behind in their retirement savings, catch-up contributions can help them increase their savings.
As part of Secure Act 2.0, workers over the age of 50 can donate an additional $7,500 in addition to the 401(k)s 2025 maximum contribution limit of $23,500.
“If you have cash flow to allow that, it will help you save money for retirement, but it can also reduce your current tax liability if you are in a higher tax range,” Fincher said.
read more: Four ways that retirees can save taxes
59 Tap your retirement account before turning 1/2 and you have a higher chance of a 10% tax penalty. But in the 60s, there's no more need to worry about getting punished for getting an early distribution.
“In the '60s, you're in the sweet spot,” Sarah Brenner, director of retirement education at Ed Slot & Company, told Yahoo Finance. “You can tap on money without worrying about penalties for early distribution, but you haven't been forced to take away the money yet. There's no RMD. [required minimum distributions start] Until 73, it's really a sweet spot for planning. ”
The catch-up contribution can also be overcharged from age 60 to age 64.
“If you're over 50, you can contribute more than your employer's plan,” Brenner said. “But for people ages 60, 61, 62, and 63, there are even higher catch-up limits. And we call these super catch-up contributions.”
In 2025, 401(k) participants ages 60-63 could go beyond the limit above $7,500 for people in their 50s, making their catch-up contributions an additional $11,250. But “When you reach 64, that's gone,” Brenner said.
read more: What is the retirement age for Social Security, 401(k) and IRA withdrawal?
This year, a whopping 4.18 million elderly people turned 65, marking a record year for the baby boomer generation, reaching retirement age.
“What we know is that by 2030, almost all baby boomers, 71 million people, will be over 65,” Rita Assaf, Vice President of Retirement at Fidelity Investments, told Yahoo Finance. “So it's definitely a tsunami. …It's coming and coming very quickly.”
According to Fidelity data, baby boomers have an average 401(k) balance of $250,900 and an average IRA balance of $250,966.
At this point, those resigning or nearby should identify where they will retire and what they want to do.
“I want to determine if I have enough money to last for the rest of my retirement,” Asaf said. “Ideally, I would like to have essential expenses covered by guaranteed sources of income, such as Social Security and pensions.
It is also important to balance the risks for your investment.
“You need a balanced portfolio with short-term investments in mind that can be used in your daily life, but there are growth possibilities that can help you from that,” Asaf said. “So, for conservative investments, you really want to look at something with a fixed return, like a CD or annuity, and pin it with a growth investment. [be] If that actually happens, it withholds and grows with inflation. ”
read more: Why CDs are part of your retirement savings plan
According to the CDC, the average life expectancy for all Americans is over 77 years old, with women averaged 80. They tend to live two years. Assuming a retirement of 60-65, that means your savings need to last for more than 10 years.
As a rule of thumb, advisors recommend saving your latest annual revenue by 10-15 times or taking an average annual expense of 20-25 times.
One expert recommended that funds be allocated to “time buckets” and helped him decide when to put in to retire.
“I don't want to design all my money for long-term investments,” Lawrence Sprung, author of “Financial Planning Made Made Personal,” told Yahoo Finance. “Maybe there's an additional risk involved, but you don't want it to be super conservative just in case inflation starts to develop your head.”
Art lovers praise painting at the royal academy in London, England on September 16th, 2023. (Inside the photo via Richard Baker/Getty Images) ・Richard Baker via Getty Images
Sprung proposed diversifying across several hours using high-yield savings accounts for conservative investments in short-term and medium-term needs. For funds that don't require more than six years, he recommended that you look to more growth investments.
Importantly, at age 75 (or 73 for those born before 1960), retirees must take the minimum distribution from their retirement account.
Charles Schwab noted that it will help reduce tax deferred accounts without penalty from 59 1/2 without penalty, helping to reduce RMD and keep taxes down.
“Based on the 2025 federal tax rate, without a pre-RMD withdrawal, RMD revenues push investors up to the 32% tax bracket at age 75 and into the 35% bracket at age 81.”
“When you enter [the] In the RMD phase, you can place yourself in a different bracket and as a result, you can pay a higher Medicare premium. [to] Convert before [to a Roth IRA]pay taxes now, and… while it's in the Ross IRA, you will never pay taxes again on it. ”
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