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Saving for Retirement
Retirement is the most expensive goal that many people ever have to save for.

Assuming a 3 percent rate of inflation, a 40-year-old making $25,000, would need an income around $52,000 per year to have the same quality of life in retirement. It’s no wonder that only 13 percent of people are confident that they’ll have enough money saved to live comfortably in retirement.

Use the resources in this section to get on track to your retirement goals.

Why save for retirement?
There are many reasons to start saving for retirement as soon as possible, but these are some of the most important:  

Live your dream
By planning ahead, you can live the retirement you want. Whether you’d like to travel, help your grandchildren financially or just enjoy an active lifestyle, you need to plan ahead so you have enough financial resources to reach your retirement goals.  

You may live longer than you think
Through better lifestyles and advances in medicine, people are living a lot longer than they used to.  Just half a century ago, people spent just five to 10 years in retirement, and now the average American retiring at age 65 can expect to live 18 years or more.  It takes a lot of planning to fund a longer retirement, so be sure to start as soon as possible.  

Life Expectancy Calculator >>>



How much money will you need in retirement?
Use one or more of the following methods to estimate how much money you will need in retirement. As you do this, remember that:   

  • Some of your current expenses may be gone (mortgage, debt, raising children, etc.) 
  • Your taxes may be reduced
  • Inflation typically ranges between 2 and 4 percent each year
  • Your healthcare expenses will most likely rise

Calculate your needs
This online calculator is a good way to estimate how much money you’ll need to live comfortably in retirement.  

Retirement Needs Planner >>>

Percentage of your income

Another way to estimate your retirement needs is to determine a percentage of your current income or projected income at the time of retirement.  Seventy percent is a good amount for most people, but you may want to save more or less, depending on the lifestyle you’d like to maintain. 

Project your future budget
By predicting your future budget, you can estimate how much money you’ll need in retirement. As you get closer to retirement, your estimate will get more accurate.               

Budgeting Worksheet >>>


Your income in retirement is like a three-legged stool.  Most people will have three sources of income in retirement: personal savings, employer-sponsored retirement plans and Social Security.  If all three are well funded, you will have a solid stool to rest on in retirement.     


Employer-sponsored retirement plans
If you have an employer-sponsored retirement plan, it should be the heart of your retirement planning. You need to know how yours works, so you can make sure you’re taking full advantage of employer contributions and saving enough to retire comfortably. There are two types:  

Defined benefit plans
With this type of retirement plan, the employer provides each employee with a set amount of money at retirement, usually based on the number of years they’ve worked there and a percentage of their salary.  

Defined contribution plans
With a defined contribution plan on the other hand, the employer matches employee contributions up to a certain percentage. Because it depends on employee contributions and market fluctuations, this type of plan does not guarantee a particular retirement benefit. A 401(k) Plan is a good example of this type of plan.  

If your employer offers you a defined contribution plan, it’s up to you to take advantage of it. Seventy-five percent of people do not fully take advantage of their employer-sponsored retirement plans. That’s the same as turning down free money. Find out how valuable a defined contribution plan is with our:  

Retirement Needs Planner >>>

For example: Assume that your employer offers to match 50 cents for every dollar you contribute up to a total of 3 percent of your yearly salary. That means: if your salary is $30,000, your employer is willing to give you $900 per year. To get all $900, you have to contribute 6 percent of your salary or $1,800 over the course of the year.  If you contribute less than the $1,800, you are essentially leaving free money on the table.     

Social Security
Don’t depend on Social Security to be your only source of income when you retire or become disabled! The Social Security system faces an uncertain future, so it is best to invest on your own rather than depend on it.  

For now: If you are a worker with average earnings, your Social Security retirement benefit will replace approximately 40 percent of your average lifetime earnings.  Starting at age 25, you’ll receive an estimate of what your personal Social Security benefit might be.  Keep these statements! You and your Modern Woodmen representative can use this information to help determine how much to invest for your retirement goals.   

Today, the Social Security fund receives more in taxes than it pays out in benefits as it always has, but due to an enormous increase in the aging population, it is estimated that in 2017, the Social Security fund will begin to pay out more in benefits than it collects in taxes.  Without a change, by 2037 the trust funds will be exhausted and the payroll taxes collected will be enough to pay only about 76 percent of benefits owed. Your personal savings may have to fill this gap. 

Personal savings
Even if you have a solid employer-sponsored retirement plan and expect to receive Social Security benefits, it's a good idea to have additional personal savings. Talk to a Modern Woodmen representative about IRAs and other tax-advantage programs you can use to boost your personal retirement savings.  

How to invest for your retirement
Contact a Modern Woodmen representative to evaluate your retirement savings needs. As you invest for your retirement, be sure to:  

Save systematically
You’ll be able to save a lot more for retirement if you save consistently. Make it a part of your monthly budget to set aside enough money. Through payroll deductions or automatic withdrawals from your bank account, you can save money for retirement each month before you have the chance to spend it on something else.  

Start now
The sooner you start saving for retirement, the longer your money will have to grow and the easier it will be to accomplish your goals in the long run.   

Goal Savings Planner >>>

For example:

Age you start
to save

Savings per year
(Assuming a 7 percent
rate of return)

Amount saved for retirement
at age 65



$1 million



$1 million



$1 million


Protect your retirement with insurance
In case one of the many what-ifs in life happens to you, protect your retirement plan with these insurance products:  

Life insurance  
If you have a spouse who is depending on your income for his/her retirement, make sure that you purchase enough life insurance to cover this loss.  

Disability insurance
Disability insurance is paycheck insurance. If you become disabled during your working years, you can lose valuable income and your opportunity to save for your retirement.  

For example: If you have 30 years to save for retirement and you need approximately $500,000 in retirement income (assuming an 8 percent annual return), you would need to save about $4,415 each year to reach your goal.  If you became disabled after 10 years, you would come up $200,000 short at retirement. 

Sources: The 2009 Retirement Confidence Survey; “Life Expectancy,” National Center for Health Statistics, 2006; Social Security Trustees Annual Report to Congress, 2010.




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Budgeting Worksheet

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It's A Fact

You should start planning for retirement because:

• Life expectancy is 

• Health costs are 

• Social Security fund is