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Korabik: Making your retirement dreams reality

Published: Tuesday, Sept. 18, 2012 5:30 a.m. CST

Many of us spend a good portion of our lives working and saving for the light at the end of the tunnel – retirement. It’s something we dream about. But in order to live the retirement of your dreams, it’s important to save. A failure to plan is a plan to fail.

A simple and safe savings tool is a company 401(k) plan. That’s why Savant Capital Management is designating the week of Sept. 16 through 22 as National 401(k) Week to spread awareness about the importance of saving for retirement and utilizing your company’s 401(k).

According to a study by the ING Retirement Research Institute, nearly half (48 percent) of respondents ages 25 to 69 who are employed full time and earn at least $40,000 a year don’t feel prepared for retirement. There’s a way to help get on track, and it is to start saving now.

The first step is participating in your company 401(k) plan. Taking advantage of this employee benefit can mean more money in your pocket later and a more satisfying retirement. When you start a new job, fill out your 401(k) paperwork early and start saving as soon as you are eligible to participate.

Contributing money to a 401(k) gives you an immediate tax deduction, which means lower taxable income, convenient payroll deductions and possibly a matching contribution from your employer.

If your employer does offer a company match, take full advantage of it. Employer matches are one of the most powerful forces in retirement saving and if you don’t utilize it, you’re essentially throwing away free money. Typically, an employer match is a percentage of what you contribute to the plan up to a maximum amount – for example, 50 cents of every dollar up to 6 percent of your salary; this would mean a 3 percent employer contribution to you if you contribute 6 percent of your pay. The employer provides this to help support your efforts to save for retirement, so don’t pass it up.

Be proactive with your retirement savings and start saving early. Map out a savings plan that works for you and then determine approximately how much money you’ll need to save each year between now and your retirement. Many websites offer customized calculators to help you calculate how an investment today can grow over time. Next, put your savings plan into action. It’s never too early to get started. If possible, save more than you think you’ll need to provide an extra cushion.

Setting aside more money now helps to build a larger nest egg for your retirement. Plus, don’t forget to increase your contribution amount when your salary increases.

Another key to a successful savings plan is maintaining a diversified portfolio. Your portfolio should contain stocks of different sizes, bonds, money market funds and other asset classes. The market has been a roller coaster over the last few years, and remaining diverse in your investments will help you preserve the principal while maximizing returns and minimizing risks. When your portfolio is well diversified, you may see small gains even when some markets are performing very poorly.

There is definitely light at the end of the tunnel, and your retirement will be here before you know it. Start funding your future now.

• Jerry Korabik is a financial adviser with Savant Capital Management. Savant has an office in Geneva at 330 W. State St., Suite 300.

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