Joel Johnson, CFP® and Kara Sundlun talk about retirement planning on this episode of Better Money on WFSB Channel 3.

Retirement Plans: Pensions and 401(k)s

You are responsible for your own retirement. Most companies have shifted away from pension plans because they are too expensive, so our retirement planning is now up to us.

Most private employers offer 401(k)s, sometimes with a very generous match to take advantage of. For example, some require their employees to contribute 6% to receive a 3.5% match.

Social Security

Changes made to Social Security are important to keep track of and are made yearly. For example, the change in the full retirement age, which was revised during the Reagan Administration, was increased to 67 from 65.

You cannot live off Social Security alone, so be sure to have a retirement income plan in place.

Life Expectancy

One of the reasons the full retirement age was extended to 67 is because of the increase in life expectancy. You can expect to be in retirement up to 30 years. Think about the money you might need when you are 90; do not go crazy with spending when you first retire because you don’t know if you’ll need that money in the future.