Illinois Public Pension Fund Offers Keys to Saving for Retirement

-- Illinois Municipal Retirement Fund recommends five strategies for National Save for Retirement Week --

OAK BROOK, Ill. — October 12, 2009 — As the economy improves, Americans have placed a renewed emphasis on saving money. Personal savings reached a 15-year high of 6.9 percent in June, which suggests that Americans are turning their backs on pre-recession profligacy and embracing thriftiness. Further, the government recently announced plans to encourage saving by making it easier for employers to automatically enroll employees in 401(k) plans and allowing taxpayers to use tax refunds to buy U.S. savings bonds.

In an effort to support this trend, the Illinois Municipal Retirement Fund (IMRF) will recognize National Save for Retirement Week Oct. 18-24 by offering strategies people across the state can use to work toward a secure retirement.

“This past year’s economic downturn showed us all how important it is to have a sound retirement savings strategy,” said IMRF Executive Director Louis Kosiba. “IMRF has always held fiscal discipline paramount, which is why we work toward a 100 percent funding goal. With Americans increasingly focused on securing their financial future, we want to do our part to help Illinois citizens adopt effective retirement saving strategies.”

IMRF has more than 182,000 members, including more than 89,000 retirees, and manages more than $21 billion in assets. In recognition of National Save for Retirement Week, IMRF offers the following retirement saving tips:

1. Decide what kind of retirement you want: As you save, it’s important to know what you want out of your retirement. Some people plan to invest in new hobbies or travel. On the other hand, some retirees don’t want much of a change from their working lives and will therefore need to save less. There’s no right or wrong way to retire. But it’s important to plan early on for the life you want and calculate a target amount of savings each month that will help you reach your goal. You can do that by using one of the many handy retirement calculators available, like this one from Kiplinger (http://www.kiplinger.com/tools/retirement-savings-calculator.html).
   
   
2. Eliminate your debt: Paying off debt is crucial to ensuring adequate retirement savings. Start by paying off the debt with the highest interest rates — typically credit cards. The new credit card reform bill will make this easier than ever before (most of its provisions go into effect in February 2010). If you have an account that ties different interest rates to different purchases, money you pay over the minimum will now apply to the balances with higher interest rates first, meaning you pay off your debt more quickly (currently, payments go toward paying off balances with lower interest rates). After ridding yourself of debt, know your needs, know your means, spend wisely and, where possible, adopt the tried and true method of “saving up” for purchases instead of buying on credit.
   
   
3. Use all available resources: Make sure you use all three legs of the “three-legged stool” of retirement savings: Social Security, an employer-based retirement program and personal savings. Take full advantage of the programs your employer offers. Public sector employees have access to 457 and 403b plans while the private sector has 401(k) plans. Additionally, many employers match 401(k) contributions, so if you’re not maxing out your contributions, you’re leaving money on the table. Finally, you should save on your own, using tools such as IRAs.
   
   
4. Train yourself to save: Saving can seem daunting at first, but if you make it a habit, it gets easier over time. Start by saving a little bit out of each paycheck and considering it a monthly expense. Set it aside, and don’t touch it. Gradually set aside more each month until you reach your target amount.
   
   
5. Stay committed to your strategy: Today’s volatile economy has made many people gun-shy about entering the market. There will always be spikes and dips, but pulling out of the market completely when things get tough will minimize long-term earnings. Those who adopt a diversified investment approach that adjusts over time (higher return and higher risk investments such as stocks when you’re young; lower risk investments as you age) — and stick with it — will reap rewards in the long-term.
   

As Americans begin to focus more on accumulating personal savings, saving for retirement should be a top priority. Using these strategies, people of all ages can begin to work toward achieving their goals and eventually enjoy a more fulfilling and stress-free retirement.

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ABOUT IMRF
The IMRF was created by the Illinois General Assembly. Since 1941, IMRF has partnered with local units of government to provide death, disability and retirement benefits for working and retired public employees. Today, IMRF has more than 182,000 active members working for nearly 3,000 different units of government, including school districts, counties, cities and villages, parks and libraries. It has more than 89,000 retirees receiving an average monthly benefit of $877. IMRF consistently works toward reaching full funding over the long term, ensuring that it remains financially sound. A full funding goal guarantees public workers a secure and modest retirement income at the lowest long-term cost to taxpayers.

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