Make a Plan for Your Retirement Savings

The first step to effectively using your 401(k) is to assess your retirement needs.

Couple Saving Money
(Image credit: Getty Images/iStockphoto)

How do you come up with the right amount to divert to your 401(k) plan?

Financial planners have traditionally estimated that retirees need 80% or more of preretirement income to maintain their standard of living, but individual situations vary greatly. Paying off a mortgage before retirement can substantially reduce need for income, while paying for health insurance can radically inflate it.

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