You want to see your staff financially prepared for the future. However, getting them to participate in a retirement plan can be challenging at times. Here are a few tips that you can pass on to help them:
1
Save at least 10% of your income. This provides a simple target for you to work towards as part of a disciplined savings approach. Even 1% is better than nothing. Make sure you take advantage of any employer match. Also, turning raises into contribution increases is an easy way to put more away without reducing your budget.
2
Plan on living 20-25 years in retirement after age 65. Life expectancy for our youngest generation is now up to 100 years old. So, your retirement could easily be 20 or even 30 years depending upon your age.
3
Plan on needing 70% to 80% of your income in your future. Certain expenses will likely disappear or be reduced once you leave the workplace. However, healthcare needs and spending continue to increase, and you always need to calculate for inflation (i.e., today's dollars will be worth less in the future).
4
Rebalance your asset allocation at least once per year. If you are making investment selections on your own, then you will want to annually adjust your portfolio back to an appropriate asset allocation mix to keep your investments aligned with your risk tolerance and goals. This is not necessary if you are using a professionally managed model since asset allocation and rebalancing is done for you based on the model's stated objective.
5
The percentage of your portfolio should match your age. This rule is a reminder that your portfolio needs to change as you get older, becoming gradually more conservative (i.e., avoiding risk).
