Is Your Present Job Costing You Your Retirement?

In the wake of America’s biggest economic downturn since the Great Depression, many find themselves working at jobs that not only pay less but also provide far fewer benefits than was the case before the slump.

For those looking beyond their working years to what hopefully will be a financially secure and comfortable retirement, the outlook for reaching their goals may seem very gloomy indeed.

But with a little strategic planning, in time you can move from a low-paying job now to a more lucrative position that will allow you to set aside more savings for the future and your eventual retirement.

And if you play your cards right, you may land a position with a company that offers a retirement savings plan such as the 401k that allows you to grow your money at an even faster pace.

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Advance Planning Is Key

Like anything worthwhile in life, retirement requires advance planning — lots of planning.

You need to decide what sort of life you want to lead after leaving the workplace and, most importantly, the level of monthly income you’ll need to pay the way for such a lifestyle.

To achieve savings goals, you first must decide how much you’ll need to save to support you in your retirement years.

Without savings goals, you have no way to gauge just how much should be put aside in savings each month to accumulate your retirement nest egg.

Survey Findings Alarming

Nearly half of all American workers 45 and older have made no attempt to calculate the amount of money they’ll need to save in order to finance a comfortable retirement. This alarming statistic comes from a 2013 survey conducted by the Employee Benefit Research Institute, a Washington, D.C.-based organization dedicated to helping develop sound employee benefit programs.

Not surprisingly, the same EBRI survey indicated that far more American workers expect to be working longer before retirement than was the case a decade ago.

EBRI’s 2013 Retirement Confidence Survey also revealed that only 67 percent of those surveyed believe they will have enough money to cover their basic expenses during retirement. That’s down sharply from 80 percent in 2012.

Breaking down the 2013 data even further, 24 percent of respondents are very confident they’ll have the money they need to cover basic expenses, while 43 percent describe themselves as only “somewhat confident.”

Get a Plan Started

The most important step you can take toward retirement is to draw up a plan that can serve as your roadmap to the life you hope to lead after your working days are over. The earlier you start this plan, the better. However, it’s never too late to put a plan into place.

You’ll find a wide array of online planning tools that can provide a framework for your retirement plan. CNN Money’s Retirement Planner is a simple tool that can get you started. Or you can use one of the online templates as a model for a retirement planner of your own design.

Save for Retirement

Ideally, you should be stashing away 15 percent of your current gross income into a retirement savings fund.

If that’s impossible given your modest current earnings, save as much as you possibly can. If and when you move on to a better-paying job, you can try to increase your savings to compensate for the years when you were unable to save as much.

Take full advantage of your employer’s savings plans, particularly 401k plans in which the employer matches your contributions, at least up to a certain percentage point.

Another worthwhile investment opportunity available from many employers is an employee stock ownership plan, or ESOP, which allows vested employees to purchase company stock at a discounted rate.

Typically, employees put a specific amount of pre-tax earnings into an ESOP fund that is used to purchase company shares at, say, 85 percent of face value. Assuming the company is solid financially and doing well, that amounts to an instant 15 percent savings, which can add up quickly over time.

If you are currently working in a job where no such employee benefits are offered, your search for a better-paying job should also take into consideration what benefit plans are available from prospective employers. Whether you work for company that sells real estate, markets various products and services, specializes in mobile payments or offers various financial investments, take advantage of what your employer offers you.

Timing Your Retirement

While most individuals dream of retiring as early as possible, that might not be a viable option for you, particularly if you’re getting a late start on your retirement plan or if you’re now unable to save as much as you’d like for the future.

Working a few years longer, however, can pay significant dividends, particularly when it comes to the size of your Social Security check each month.

Forbes magazine estimates that an unmarried worker earning $50,000 a year would get a monthly check of $1,011 if he took early retirement at age 62 in mid-2013. If he waits until the full retirement age of 66, the check would increase to about $1,420.

Postponing benefits until age 70, the worker would receive a monthly check of $1,972, almost twice the amount of the monthly benefits from early retirement.

About the Author: Jay Fremont is a freelance author who has written extensively about personal finance, corporate strategy and social media.