Financial Literacy Month: Introduction to Retirement

This month, we’re bringing you bite-sized servings of financial literacy. Each week, we’ll introduce you to a core concept and map out a fun and easy daily action item. This is our fourth week in the series.

Thinking about retirement can be overwhelming. For starters, there are so many different types of accounts, terms, and tax implications. And we have to juggle saving for something that is 20, 30, or 40 years away with our short-term goals of paying off debt or saving up for a house.

The good news about retirement planning is that you don’t have to think about it daily. If you take some time to set it up well, you only need to check in on it a few times per year at the most.

What is retirement? 

Retirement is generally thought of as the point at which you stop working — although in practice it looks different for everyone. To retire, you should aim to have enough assets and/or passive income to cover your monthly expenses (this is also called “financial independence”). 

Why is retirement important?

Most of us don’t want to work our entire lives, so we need to ensure that we have a way to cover our living expenses without a paycheck. Even if you do want to work your entire life, there is no guarantee that you will be able to; health and life circumstances can get in the way.

How much money do I need to retire?

The amount of money you need to retire mainly depends on how much you plan to spend in retirement. If you don’t know how much your expenses will be in retirement 20+ years from now (who would?), use your current annual expenses. Add in any additional expenses you expect to have and remove any expenses you know you won’t have. Multiply your total estimated annual expenses by 25 to get a starting point for how much to aim for in savings when you retire.

How do I save for retirement?

If your employer offers a retirement plan, that’s a good place to start, especially if they offer any matching contributions. You can set a certain percentage of your salary to be withheld from each paycheck and go directly into your retirement account. Out of sight, out of mind works wonders! If you don’t have access to retirement savings through work, a Roth IRA is typically a good place to save as long as your income falls within the limits

To continue learning more about retirement, here is your financial literacy “homework” for the week:

Saturday: You read this blog post — you’re done for the day!

Sunday: If you don’t know where to start when it comes to retirement, listen to Jenny and Tina Gymsplain Retirement Savings.

Monday: Want to dig deeper into figuring out how much you need to save for retirement? Read Everything You Need to Know to Prepare for Retirement.

Tuesday: Use this worksheet to calculate how much you are currently saving for retirement each year and gather information on your current savings.

Wednesday: It’s super important to keep track of your old retirement accounts since you already did the hard work of saving that money. Listen to Using Capitalize to Rollover Retirement Savings with Bevin and Gaurav Sharma.

Thursday: Deciding between pre-tax and post-tax contributions? Read Ask a Trainer: “I have the option to contribute to a Traditional 401k or a Roth 401k. Which should I choose?”

Friday: Take this quiz to see what you learned this week. And if you have any questions, join our Instagram Live at 12 pm EST to ask a FinGym trainer!

Join us next week for an introduction to investing!

Financial Literacy Month: Introduction to Retirement is written by Kylie Lipinski, A Certified Financial Trainer for

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