4 Steps to Budgeting for Retirement with your 401(k) (Infographic)

4 Steps to Budgeting for Retirement with your 401(k) (Infographic)

4 steps to budgeting for retirement infographic

Planning for retirement can be tricky. But saving for retirement is a crucial part of your overall financial wellness. So, how do you create the best retirement savings plan for your current place in life and your retirement goals? With your 401(k) and a little bit of realistic budgeting!

401(k) Basics

As a quick reminder, a 401(k) is a retirement savings plan established by an employer that lets employees save and invest a portion of their paycheck. Often, the employer matches a percentage of the employee’s contribution and the total vests over time. Learn more about the basics of your 401(k) here. Once you understand everything your 401(k) can do for you, it’s time to jump into creating your retirement savings plan.

How Your 401(k) Ties Into Overall Financial Wellness

While the thought of planning so early for retirement can seem daunting now, the long term benefits and overall improvement to your financial wellness pays off in the long run. No matter your current age, saving for retirement ought to be part of your budget. Here is a four step plan to help you create a budget that also allows you to reach your retirement savings goals:

1. Strategic Spending:
The first step requires you having a thorough understanding of your current spending habits. Reviewing your transactions each month may reveal that you’re spending too much on your morning coffee or at the movies on the weekend with the kids. Identifying the areas that are impacting your ability to save makes it even easier to see how you can shift your spending and start growing your retirement savings.

2. Educated Budgeting:
We all know how important a budget can be when it comes to saving but the key is creating an educated budget. Once you have looked at your spending habits, debt, and other payments, you can build a realistic budget that fits your needs. It is crucial that this budget includes ongoing 401(k) contributions so you can make to keep moving you toward your retirement goals.

3. Smart Savings:
Making the most of the money put away for retirement is an important part of your budget’s savings plan. Saving your money in your 401(k) is the best way to maximize the money you’ve set aside, helping to build a comfortable retirement. On top of your 401(k) investments, be sure to maintain other savings accounts for either emergencies or other dedicated events down the road. Dipping into your 401(k) before you retire can be detrimental to your overall savings so having those backup savings accounts is critical.

4. Long-Term Planning:
Your educated budget is a great current snapshot of your financial situation, but what are your long-term financial goals? What kind of lifestyle do you want to live during retirement? These are the questions you need to ask yourself when setting your long-term savings goals. And, remember, make sure those goals are realistic with your current life position and expenses.

Your ability to prepare for retirement hinges on your long-term preparations just as much as your short terms ones. Follow our four key steps now to make sure you are making the most of you 401(k) plan so you can live your best life during your golden years.

Next steps:

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Jenny Carter

Jenny Carter

Vice President, Associate Managing Director, Retirement Plan Services (515) 245-5245 Email Jenny

Jenny Carter is vice president, associate managing director of Retirement Plan Services in the Wealth Management Division at Bankers Trust, where she provides oversight for qualified and nonqualified retirement plan administration. She joined the Bank in 2010 and served in Supervisor and Manager roles before being promoted to her current position in 2015. Jenny holds a Retirement Plan Associate (RPA) designation through Certified Employee Benefits Specialist (CEBS), and Fellow, Life Management Institute (FLMI). Her background includes: implementation, administration, and technical compliance of defined contribution plans. Prior to joining Bankers Trust, Jenny worked in positions at Diversified Investment Advisors, Marsh Advantage America and Principal Financial Group. She earned her Bachelor’s degree in business from William Penn University before starting in retirement services. Jenny is also a contributor of the Retirement and Investing category of the Education Center. Within her category, she shares her expertise on retirement planning. Simplifying complex topics for readers has provided her a unique outlook to what she does at the bank Jenny is active in the community as a volunteer at her children’s school and with Meals from the Heartland, and she previously served as a Girl Scouts troop leader. In her free time, she enjoys being involved in her kids’ activities and reading.

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