Celebrate National
Save for Retirement Week!

More than 50% of all employees in the U.S. have less than $25,000 in total savings and investments (including retirement assets but excluding their homes). And about 40% of those age 55 and older have less than $100,000 in retirement savings. In response to these sobering statistics, the U.S. Senate has unanimously approved a bill designating October 21 through 27 National Save for Retirement Week. This national observance aims to encourage employees to save more for retirement.

Mark the Occasion

Here are three ways to celebrate National Save for Retirement Week:

• Enroll in a retirement plan. If your employer or salary-paying unit sponsors a retirement plan, such as the United Methodist Personal Investment Plan or the Horizon 401(k) Plan, take full advantage of it. Enroll, if you haven’t already. If you’re already enrolled in a plan, try to contribute more.
• Set specific goals. Figure out how much money you’ll need during retirement. Some experts recommend having an annual income (including Social Security) of 80% to 100% of what you earn your last year on the job. Once you have set your goals, use the General Board’s pension projection calculator, available on our Web site in the Resources section, to see if you are on track to achieving these goals. You can type in different contribution rates to see the effects of saving more.
• Cut your daily expenses. For example, brewing your coffee at home and bringing it with you in a commuter mug can save you a couple dollars a day. Save a few more dollars a day by packing a lunch and drink instead of buying them at a restaurant. And keep your car’s engine tuned and your tires properly inflated—you could save hundreds of dollars annually on gas. Put the extra money you save toward your retirement.

Can’t Afford to Save?

Worried that you can’t afford to start saving or increase your contributions to your retirement plan? You might be pleasantly surprised at how little it costs. Contributing to your plan on a before-tax basis reduces your current taxable income, so you’ll pay less in federal—and often state—income taxes, and if you’re a clergyperson, self-employment (SE) taxes. This results in lower out-of-pocket costs to save for retirement.

Consider these examples. It costs the following lay couple only $3,400 in take-home pay to contribute $4,000 to their retirement plans. And it costs the clergyperson and spouse only $2,877 to contribute the same amount after federal and SE taxes. Here’s how they do it:

* This includes a parsonage value of $10,600.

** These hypothetical examples are for illustrative purposes only. Before-tax contributions and earnings are tax-deferred. When you withdraw your money, your distribution will be taxed at the tax rates in effect at the time of the withdrawal, although clergy are generally eligible for housing allowance exclusion in retirement. Actual net income might also be increased by state tax savings.

If either couple’s income were less, they could also be eligible for the Saver’s Credit. This credit reduces the amount of tax you pay at tax time.

Another easy way to increase your retirement plan contributions is to contribute a portion—or even all—of any raise or bonus you receive. That way, you aren’t reducing your regular spendable income.

Wondering how much you can—and should—save? Need help calculating how various contribution amounts will affect your paycheck? Not sure about your goals? Need an action plan? Consider enrolling in Ernst & Young Financial Planning Services. Ernst & Young financial planners can help you develop a personalized retirement plan. For more information about Ernst & Young, visit www.gbophb.org/sri_funds/planning.asp.

For more information about saving for your retirement, download our Saving for Your Future brochure.