Tag Archives: expenses

Financial Literacy and Retirement

April is Financial Literacy Month. But what is financial literacy? Basically, it’s the ability to understand and use financial skills to make wise decisions about your finances.

Financial literacy encompasses a variety of skills, but we’d like to focus on some basic skills that are relevant to planning for a successful retirement. Whether you’re just starting your career, planning on retiring soon or already retired, mastering these skills will help you and your future financial security.

financial literacy

Taking Stock of Your Finances

A good place to start building your financial literacy is by getting a handle on your current financial situation. Ask yourself some basic questions:

  • How much do you earn and spend each month?  
  • How much debt do you have?
  • Do you have any major expenses on the horizon?

If you know where you stand, you’ll be in a better position to plan for the future.

If you’re planning for retirement, you can estimate your pension by using the benefit calculator in Retirement Online. (You can also check your future Social Security benefit online.)

Creating a Budget

This financial planning tool helps you track your income and expenses. Having a budget can help you make better financial decisions, avoid debt, prepare for emergencies and save money.

If you don’t know how to get started, here are some tips on creating a budget. If you plan to retire soon, you can use our worksheet to create a post-retirement budget.  

Understanding Interest Rates

Interest is great if you’re on the receiving end, but not so great if you are paying it. Unfortunately, consumers can pay very high interest rates on credit. The average interest rate on a new credit card account is nearly 18 percent, and many consumers pay 20 percent or more on their credit cards.

If you have credit card debt, and only pay the minimum each month, you’ll make little progress on reducing the balance while the interest you pay every month adds up. For example, if you owed $1,000 on a credit card with an 18 percent interest rate, and made payments of $40 a month, it would take you 71 months to pay off and your total interest cost would be nearly $500. On the other hand, if you paid $100 a month, it would be paid off in half the time and your total interest would be about $160.

Managing Debt

Debt is not necessarily bad, but it can easily derail your financial plans if you’re not careful. Credit cards pose a particular risk because they are so easy to use, but you can learn strategies to avoid credit card debt.

Saving

As a NYSLRS member, you’ll receive a lifetime pension that will be based on your years of service and earnings. But your personal retirement savings can be an important supplement to your pension and Social Security. It’s never too early or too late to start saving for retirement. To learn more building your savings, read our recent blog post Saving for Retirement. Is Now the Right Time?

Follow our blog for future posts on retirement savings and related topics.

Countdown to Retirement — Eight Months Out

Once you decide to retire and begin preparing, the final months leading up to your retirement date go by quickly. Previously, we discussed the steps to take when you’re 12 months away from retirement. As we continue our Countdown to Retirement series, let’s take a look at what you should be doing eight months out.

Eight Months Out: Review Retirement Income

Some experts say that you need 80 percent of your pre-retirement income to maintain your standard of living once you stop working. There’s a good chance that your NYSLRS pension alone won’t provide that level of income. With retirement lasting 20 years, 25 years or even longer, it’s important to have a plan in place for the extra income you’ll need.

That’s why, at least eight months before your planned retirement date, you should start reviewing any other income you’ll have available. Some common sources include:

Check out our Straight Talk About Financial Planning for Your Retirement publication for monthly income and expense worksheets to help you assess your retirement finances.
Countdown to Retirement - Eight Months Out

Counting Down

Your planned retirement date is less than a year away. As the day gets closer, check out the rest of our Countdown to Retirement series for posts covering your retirement budget, what we accept as proof of your date of birth, what to do after you’ve filed your Application for Service Retirement (RS6037) and more.

National Retirement Security Week 2016

This year’s National Retirement Security Week runs from October 16 through 22. It’s a good time to reflect on your personal financial goals and see if you’re on target to meet them. You can ask yourself questions like, “Will I have enough income when I’m retired?” If the answer isn’t clear, you can start taking steps to improve your retirement security.

The Three-Legged Stool: An Example of Retirement Security

Think of your future retirement as a three-legged stool. Each leg represents a different income source that can support you in retirement. The first leg of the stool is your NYSLRS defined benefit pension. Your NYSLRS pension will provide you with a monthly benefit for life based on your service credit and final average salary. The second leg on the stool is your Social Security benefit. Your Social Security benefit is based on how much you earned during your working career. For more details about your Social Security benefit, please visit the Social Security Administration’s website.

The third leg is your own personal savings, such as your own bank or investment accounts. Your personal savings can bridge the gap between what your NYSLRS pension and Social Security will provide. All together, these three legs can support you over the course of your retirement.
Retirement Security in 5 Steps

Ways to Save for Retirement

If you haven’t been maintaining your personal savings, you should start saving as early as possible. The best way to get into the savings habit is to just do it. Here are some suggestions to get into the saving habit:

Also consider looking into accounts that use compound interest. When your money is compounded, it increases in value by earning interest on both the principal and accumulated interest. That way, the more time your money has to grow, the better off you’ll be.

Remember, retirement security just doesn’t happen – it takes planning. You can learn more about retirement planning and our 5 Step Plan for achieving your financial goals on our website.