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A Financial Guide to Retirement

By David McAlpine, Wealth Management Group Officer



Living on a fixed income in retirement can be scary, so don’t do it. With advance planning and regular savings, you can prepare financially for a comfortable, enjoyable retirement. We created this financial guide to retirement to help you think through your goals, understand your savings and income options, set a savings goal, and identify other steps such as paying off debt. If you need help reaching your retirement goals and objectives, contact our Wealth Management Group.

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Text: Thinking through lifestyle goals for your retirement will help you set the financial goals you need to reach to support your desired retirement.

What are your goals for retirement?

How can you draw a map if you don’t know where you’re going? Thinking through lifestyle goals for your retirement will help you set the financial goals you need to reach to support your desired retirement. These questions will help you get started:

  • At what age will you retire?
  • What will your sources of retirement income be?
  • How will you pay for healthcare?
  • Where will you live in retirement?
  • What kinds of hobbies and activities do you want to pursue?

Once you have answers, you can begin to estimate the amount of money you need to save to cover your living expenses in retirement. You’ll also have a sense of how much time you have left to reach your retirement savings goal, based on your planned retirement age.


How To Save For Retirement

Now that you have a better sense of where you’re going, it’s time to make a plan. Learn about the different types of retirement savings accounts:

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Text: What's the difference between a 401(k), 403(b), and IRAs? Learn what is best for your retirement plan.

Employer Sponsored Plans

401(k) Plans

A qualified profit-sharing plan that employers can offer as an employee benefit. Both employers and employees can contribute to employees’ accounts. Elective salary contributions can be made from pre-tax dollars and excluded from your taxable income for the year.  Contributions into the plan are not subject to tax until distributions are made.  If your plan allows, elective salary contributions can be made into a Roth account, which allows those contributions and associated earnings to be tax-free in retirement. Annual contribution limits are set by the IRS and usually increase each year. People age 50+ can make an additional “catch-up contribution” beyond the standard limit.


403(b) Plans

A tax-sheltered annuity (TSA) retirement plan offered by public schools, churches, and non-profit organizations. Both employers and employees can contribute to employees’ accounts. 403(b) plans are similar to 401(k) plans, just available from different types of employers (private vs. public and tax-exempt).


SEP Plan

Employers contribute to traditional IRAs for themselves and their employees–up to 25% of each employee’s pay. Only the employer can contribute. Available to businesses of all sizes but especially popular among small business owners and the self-employed.

SIMPLE IRA Plan: Available to small businesses with less than 100 employees. Employers must contribute each year to employees’ accounts; employee contributions are elective.

Payroll Deduction IRA: Employees open a Traditional or Roth IRA on their own and then choose a payroll deduction amount to contribute to their IRA. An easy way to automate your retirement savings.


Individual Retirement Accounts (IRAs)

Anyone can open an IRA–you don’t need to enroll through your employer. In fact, IRAs are a great retirement savings option for people who don’t have access to an employer-sponsored  plan or who like to contribute more than they are able to in their employer sponsored plan. Potential tax advantages vary depending on the type of IRA. Annual contribution limits are set by the IRS and catch-up contributions are available to people age 50+. Which type of IRA is right for you?

  • Traditional IRA: Contributions may be fully or partially tax deductible depending on whether you are already covered by an employer sponsored plan.
  • Roth IRA: Contributions are subject to income limits and are not tax-deductible. Instead, contributions grow tax-free and you’ll enjoy tax-free distributions in retirement.

Learn more about how an IRA can help you prepare for retirement.


Estimate your social security retirement benefits

Along with your retirement savings account(s), monthly social security benefits will likely be an important part of your retirement income. Estimate your retirement benefits online–you can try out different ages to see how your retirement age affects your monthly benefit amount.


Non-Traditional Retirement Income

In addition to saving for retirement, some people may want to add a non-traditional source of income to their retirement plan.  These can be great options for those with specific goals and objectives as well as individuals who are maximizing the contributions available to them in their employer sponsored plans and IRAs. Explore your options:

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Text: Non-traditional sources of retirement income could be a great way to supplement your typical income sources, each with its own set of risks and rewards.

Health Savings Account (HSA)

If you are enrolled in a high-deductible healthcare plan, you may be eligible to open an HSA. HSAs offer a triple tax advantage:

  • Contributions come from pre-tax dollars
  • Funds grow tax-free when invested
  • After age 65, you can take tax-free distributions for any expense (not just qualified medical expenses)
  • Distributions for qualified healthcare expenses are always tax-free at any age

Stocks, Bonds, and Other Investments

Investing doesn’t have to be limited to your retirement accounts. You can purchase stocks, bonds, and other investment tools that aren’t behind the retirement wall.  The benefit of this type of account is there is no annual contribution limits.


Investment Properties

Owning one or more rental properties can provide additional income in retirement through monthly rent collected. If you purchase the investment property now, instead of waiting for retirement, you may be able to pay the mortgage off before you retire, which would mean more of the rent collected goes into your pocket.

If you have a second home or wanted to sell your current home to downsize and get two homes, you could use the second home for rental income. Alternatively, you could move into a duplex, living in one unit and renting the other for extra income.

Owning investment properties is a great way to diversify your cash flow. You can put the net income in a non-retirement savings account if you don’t need it now. If you retire early, this could be your bridge income until you can withdraw from your retirement accounts. Contact a loan professional today.


How do you know how much is enough for retirement?

Each person or couple’s “enough” will be different depending on their financial situation and plans for retirement. A good rule of thumb is to save 10-15% of your pre-tax income each year into a 401(k) or IRA.  Another option is to sit down with a wealth management professional and put together a financial plan that will help you determine whether or not you are on track.


Finally, work toward a debt-free retirement

 If you have a mortgage, car loan, student loans, credit card balances, or any other type of debt, you’ll may want to pay those off before you retire as it can provide you with more flexibility in retirement.  If you are pursuing a debt-free retirement, we recommend prioritizing paying off higher interest debt first.

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Text: Peoples Bank Wealth Management Group consists of trust, investment, insurance, and farm management professionals who will partner with you to help you reach your goals.

Contact our Wealth Management Group!

Peoples Bank Wealth Management Group consists of trust, investment, insurance, and farm management professionals who will partner with you to help you reach your financial goals. Whether you’re planning for retirement or any other stage of life, our team has the knowledge and experience to help develop a plan for success. Contact us or visit us today.


Investment products are not FDIC insured, not a bank deposit, not guaranteed by the bank or any US Government Agency and principal may lose value.
Peoples Bank nor its representatives offer tax or legal advice. Please contact your legal or tax advisor regarding your situation.

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Make sure you're on the right track for retirement.


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