These are the five things employees need to remember when planning for retirement, according to Fidelity Brokerage Services.
Create a plan -- The first step every working American should take is to create an individual-retirement plan. In building a plan, employees can factor in their specific circumstances such as current savings, anticipated income sources, lifestyle, expenses, geographic location and likely healthcare needs in retirement.
"Overcoming initial inertia is half the battle in retirement planning -- employees often need guidance to make the most of their many savings and investing options," says Pat Goepel, president of Fidelity Human Resource Services.
Save early, save often -- From the time they enter the workforce and throughout their career, employees need to get started saving as soon as possible and take it seriously. They should consider the full range of savings opportunities, from workplace retirement plans, to personal savings, to health-savings accounts and other accounts dedicated to funding healthcare expenses.
"Employees should also be sure to contribute enough to qualify for their employer's matching contribution -- this is as close to free money as you can get," says Goepel.
Evaluate and monitor your total benefit package -- As trends continue to shift away from traditional pension and retiree medical plans, more of the responsibility for retirement security is shifting onto the individual.
Employees can use financial-modeling tools and calculators to help make the best decisions on their total compensation package and having a holistic view of workplace savings, healthcare, and other employer-provided services can help employees optimize the value of their benefit dollars.
Include healthcare in your overall financial picture -- Fidelity estimates that a 65-year-old couple retiring in 2008 will need approximately $225,000 to cover medical costs in retirement, so employees should take advantage of health-planning tools and education offered through the workplace or their health-plan provider.
A healthy lifestyle also plays a major role in helping employees manage their current and future healthcare costs. As healthcare costs continue to skyrocket, evaluate a high-deductible health plan in conjunction with an HSA to make educated healthcare decisions, while saving money for future healthcare needs.
Take advantage of the auto-features of your workplace-savings plan -- Employees can put themselves on a road to retirement readiness by leveraging the auto solutions of workplace savings plans -- including auto enrollment, auto increase and auto default to lifecycle or balanced funds, or managed accounts. This is a great way to help stay on the right path towards retirement goals.
Goepel adds: "Over half of our large corporate plans are already utilizing lifecycle funds as the default investment option, which represents an increase of more than 100 percent from just a year ago."