Nobody's perfect. But many experts say the trouble with so much formal retirement planning is that people think it must be done perfectly. By the time they even begin to think about leaving their career, they somehow imagine they should have had it all figured out by now, and already stashed away a million bucks.
But that's not true.
Retirement planning is a process - not an event - and one that requires regular tweaking along the way. Such tweaks can help ensure that you have reasonable - and achievable - savings goals, linked to a sound strategy. Online IRA calculators can simplify the tweaking process.
"It all depends on your age and situation," said John Papa, president of Diversified Planning Strategies, in Caldwell, New Jersey in a recent interview with Ally Bank. "It's okay to start out by saving smaller amounts, and to not have a grand plan. The key is to begin thinking about how you can find ways to save more. You don't have to do it perfectly - saving anything is better than saving nothing."
Even just dipping a toe into the planning process is helpful, he said, because it can provide insights into how saving even a little bit each month can yield tremendous returns down the line.
"We tell our clients to use [IRA calculators] to get started looking at the future value of their money," Papa told us. "Plug in the amount of money you want to contribute per year, the interest rate and the number of years you have until you think you'd like to retire."
It can be very powerful, he says.
"For example," Papa said, "I just did a calculation for a 30-year-old, contributing $5,000 to an [Individual Retirement account (IRA)] each year, or about $208 per paycheck. Assume that earns an average 5 percent rate of return for 35 years, and by age 65, that person would have $451,601."
That kind of math can be very motivating.
And running the numbers through an IRA calculator may make people less likely to make one of the biggest retirement planning blunders: Cashing out a 401(k) when they leave a job. "Because they think it's such a small amount," they make that mistake according to Papa. "But not only do they have to pay taxes on it and a penalty, they lose the chance to have it grow over the years ahead."
Use The Ally Bank Calculators to Get a Better Sense of How an IRA Could Help You Achieve Your Goals.
Ally Bank IRAs can help you all along the way in your retirement planning path. For example, with the IRA Raise Your Rate CD, you get an interest rate that is among the most competitive in the country. And, if you notice that the current interest rate on our IRA Raise Your Rate 2-Year or 4-Year CDs goes up, you have the option to request a rate increase — one time with the 2-year IRA Raise Your Rate CD and twice with the 4-year version.
Learn more about our IRA calculators and the IRA options available by visiting AllyBank.com or call our live customer care department anytime, 24/7 at 877-247-ALLY (2559).