Preparing for Retirement Archives

Jan

2025

Guide to Choosing Where to Retire

By Kelly Boyer Sagert | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off

Where to live in retirement depends on several factors but is a uniquely personal choice. If you could use some help deciding where to spend that chapter of your life, read on. You can take a quiz to help you zero in on good options, and after that, you’ll learn more about such topics as the factors that can help you decide where to retire, some common retirement destinations, and more.

Key Points

• Retirement location choices are deeply personal, reflecting individual lifestyles and aspirations.

• Many retirees opt to remain in familiar environments, finding comfort and happiness in known surroundings.

• Surveys highlight critical factors for retirees, including safety, affordability, and overall happiness.

• Fort Wayne, Indiana, and Ocala, Florida, are noted for their affordability and suitability for retirement.

• Early retirement planning emphasizes the importance of saving approximately 25 times one’s annual expenses.

Where to Retire Quiz

First, here is a “where to retire quiz” to help you to create your plans.

Factors to Consider When Choosing Where to Retire

There are several factors you’ll want to consider when choosing where to retire. But first, it may be helpful to think about whether you’ll want to relocate at all.

Should You Relocate?

There are many reasons that you may want to relocate when you retire, but there are plenty of reasons that you may not want to as well. It may be difficult to reacclimate to a new area, for instance, and be away from long-established networks, habits, and friends. If your family is nearby, too, it may make it even more difficult to move away.

But each retiree’s decision will depend on their own circumstances, and whether they’re ready to pack up and move on, or stay put. With that in mind, here are some factors to consider if you are thinking of moving away during retirement.

Climate and Topography

When you picture yourself in your ideal location, what is the weather like? Are you the type who wants to live the “70-plus degrees and sunny” lifestyle year-round? Or do you want to experience the full array of seasons, with fall leaf-peeping and some wintertime snow to delight in?

As you think about your surroundings, it can be smart to daydream a bit and envision where you’d like your retirement to be. One person might want to be in the mountains, another in a small city with loads of easy walking trails but no hills, thank you.

As you contemplate these options, it can be worthwhile to delve into climate reports for each of the states in the United States and check out the “past weather” tabs to see what patterns you may observe.

Friends and Family

When thinking about retirement, don’t overlook the value of having loved ones and their social support nearby. Your dream may be to live where your children or your grandchildren do. If that sounds like you, consider whether these family members are rooted in their communities or if they frequently move (say, for work).

If the first is true, then the situation is probably simpler than if there’s a good chance that your family would move, leaving you in a community that you chose because they were living there.

Do you have close friends that have decided where they want to retire? If so, you might want to consider the area they have in mind. Having the continuity of their friendship could add to your quality of life and help you transition into retirement.

Peace and Quiet? Or Action?

You might love the peace and quiet of small towns, rural areas, and the like, where you can fish, stroll through the woods, and otherwise appreciate the beauty of nature. Or you may want to retire right where the most action is, living in a big city with everything you need within a block or two of your place, plus an array of restaurants, shows, museums, and other attractions to keep you busy. Or you might prefer a suburb that offers the best of both worlds.

Also worth thinking about: Do you want to be in a place where there’s always something going on that you can join? For some people, a 55+ community with ongoing planned activities can be most appealing.

Career Plans

Do you envision saying a permanent goodbye to the workplace in the future, or do you plan to keep working after retirement — perhaps part-time or as a consultant — through your 60s and 70s, and maybe beyond? Or maybe you’re looking forward to having a second act in a field of great interest.

You may have pursued your original career because you needed to earn a certain income, but now you can work in an area that brings you joy, perhaps in animal rescue. Or maybe you want to volunteer for an organization you feel passionate about. There are lots of buzzwords describing the new ways people may work as they reach retirement age, such as semi-retirement and unretirement. Regardless of what you call it, some retirement locations may offer more opportunity than others, depending on the path you envision.

Taxes

There’s no ignoring the impact of finances on where you choose to retire. Some states are more tax-friendly than others. There can be income tax, property tax, sales tax, and other taxes in the mix, so it can be wise to consider the best places to retire for tax purposes before you commit. For some people, where they choose to live in retirement can wind up making a difference of tens of thousands of dollars in taxes.

As you think about your options of where to live when retired, it can be wise to research the potential tax burden of a move (you can find information via some online searching) or meet with a professional who can advise you.

On the subject of taxes and affordability, another facet to keep in mind when thinking about retirement is cost of living. If you imagine retiring to, say, Austin, Texas, you are likely going to need to spend more for that in-demand city life than to live in a small town a couple of hours away from it.

Cost of Living

Taxes may only be one part of a larger concern: The cost of living. Different areas have different associated costs of living. You’re likely going to be paying less for housing and groceries in, say, Minot than you would in San Francisco, for example. There can be a lot of things to take into consideration when thinking about the cost of living and how it could affect your retirement, but it should be on your list of things to think about – perhaps prominently.

Top 10 Retirement Destinations

Many publications crunch the numbers and release lists of top retirement destinations every year. One such publication is U.S. News & World Report, which analyzes data from 150 cities in the U.S. to “assess how well they meet Americans’ retirement needs and expectations. For 2025, here are the top ten cities:

1. Naples, Florida

2. Virginia Beach, Virginia

3. New York City, New York

4. Sarasota, Florida

5. Boise, Idaho

6. Raleigh, North Carolina

7. Jacksonville, Florida

8. Huntsville, Alabama

9. Charlotte, North Carolina

10. Fort Wayne, Indiana

Key Findings from Recent Retirement Surveys

Beyond the U.S. News & World Report resource mentioned above, there is an array of information online, whether you want to research housing prices in a given area on a real-estate listing site or read a blog about what it’s like to retire in a foreign country. Certainly, there are books on these and additional topics as well. AARP magazine is also full of information about retirement locations.

Don’t forget about the value of word-of-mouth. Talking to friends, neighbors, colleagues, and family members about their plans and those of members of their circle can help you learn about what like-minded people are thinking. Again, there’s a lot of data to sift through, but it can be worth your time to sit down and do some research.

Affordable Places to Retire

Some of the most recent data out there shows that states like Wyoming, Delaware, South Carolina, and Florida are attracting a lot of domestic migration. And that some of the least expensive states in the country include West Virginia, Mississippi, and Iowa.

And when it comes to tax burdens, the states with the lowest total tax burdens (which includes property taxes, sales taxes, excise taxes, and income taxes) are Alaska, Delaware, New Hampshire, Tennessee, and Florida.

Conversely, states like Hawaii, Massachusetts, California, and New York tend to have the highest costs of living — so, you may want to keep that in mind, too.

Safest Places to Retire

If safety is your top concern, then you may be looking for states with relatively low crime rates, low mortality rates, and perhaps that are even shielded from disastrous weather patterns like hurricanes. While there isn’t a perfect place, by any measure, there are some cities and towns that tend to be safer than others.

Here are some of the safest places to retire as of 2025, according to an analysis from GOBankingRates:

1. Sleepy Hollow, New York

2. Campton Hills, Illinois

3. Lewisboro, New York

4. Bedford, New York

5. Franklin, Ohio

Happiest Places to Retire

If happiness is your aim — and why shouldn’t it be? — you may be interested in the key findings from a 2024 SoFi study that outlines the happiest cities in the U.S. for retirees. The study identified key elements that contribute to happiness — social networks, financials, and health — and examined 13 pivotal rankings within them, such as community, cost of living, and health care access.

Here’s the list:

1. Barnstable, Massachusetts

2. Naples, Florida

3. Ann Arbor, Michigan

4. Durham, North Carolina

5. Boulder, Colorado

Best Places to Retire Early

Some people want to retire before they reach 65 or 70. If you are among that group, consider the Rule of 25, which says that someone should save 25 times their annual expenses to retire — not annual earnings, but annual retirement expenses.

So if you are calculating how to retire early with annual expenses of $75,000, that means that someone would need to save $1,875,000 to stop working (at a minimum).

Important note: As you do the math, remember that this figure can’t include Social Security benefits because those aren’t available until the designated time (meaning, not during early retirement).

It can also make sense to spend less and save more now to maximize what you’ll have saved for retirement. This can have a doubly good impact. First, spending less can lower the amount needed to save for early retirement, because you’ll have fewer expenses. In addition, the money not being spent today can be invested.

Here’s another way to calculate what may be needed. Take a look at the current budget, cut out what you reasonably can, and then figure out how this budget may change in retirement years. What may require more funds (healthcare, for instance)? Less (like money spent on one’s kids)? This can help you forecast what your line item budget may look like in the years ahead.

As for some of the best places in the U.S. to retire early? GOBanking Rates lists Gig Harbor, Bellingham, and Chelan (all in Washington state) as top choices, along with Port St. Lucie, Florida. That can give you a headstart on places to check out, but there are many more.

Planning Your Retirement

As far as when to start saving for retirement, the answer is a while ago – or right now! If you feel lost, you can consult a retirement planning guide, and in terms of how to save, you may have such options as:

• 401(k) Retirement Plans: These are employer-sponsored plans and can be a convenient way to start saving for retirement.

• IRAs (Individual Retirement Accounts) Whether or not your employer offers a retirement plan, you can open this type of retirement account yourself. There are two types — traditional and Roth — which are treated differently, tax-wise.

• Self-Employment Retirement Plans: Contribution limits are higher, because you’re both the employer and the employee. There are several types, the most common being SEP IRAs, Simple IRAs and a Solo 401(k).

• Pension Plans: If you work for the government or military (or possibly for a large company), you may also benefit from a pension plan. These are less common than they used to be, but still exist.

As you save, it can be wise to frequently check in on how your savings are performing. This can help you monitor whether you’re
on track, regardless of which of the different types of retirement plans you are utilizing, and make any necessary adjustments.

If you aren’t heading towards your targets at a good rate, you may want to rebalance your portfolio to help meet your goals.

The Takeaway

When you open a retirement account at SoFi, we can help put your money to work. We first provide you with the educational tools to help you with goal planning, with a focus on mapping out a plan to help you achieve your goals more quickly, and to also help you stick with that plan. We can help diversify your portfolio, aiming to reduce some of your risk. In fact, we invest in hundreds of assets.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Help build your nest egg with a SoFi IRA.

FAQ

What is the #1 best place to retire?

The best place to retire depends on a number of factors, but many lists and analyses rank cities in states with low taxes, low costs of living, and relatively mild weather near the top. The best place to retire will ultimately come down to an individual’s preference, however.

When should I retire?

It’s difficult to say when any individual should retire, so perhaps the best answer is when you’re prepared. That means having enough money saved and invested to carry you through your retirement, and being prepared to walk away from full-time employment.

Am I ready to retire?

It may be wise to consult with a financial professional to gauge whether you’re ready to retire, at least from a financial perspective. Other than that, you may want to sit down and consider your physical and mental well-being, and other factors that may change after you retire.

How much do I need to retire?

How much you’ll need to retire will depend on your specific circumstances, including where you live and your lifestyle choices. But for a very broad answer? You’ll likely need more than seven-figures saved up.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
SOIN-Q424-109

Oct

2024

Investing for Retirement: Guide to Emerging Markets

Guide to Investing in Emerging Markets

By Mike Zaccardi, CMT, CFA | invest, Investing, Preparing for Retirement | Comments Off

Emerging market investments include owning shares in companies from countries like China, India, Brazil, and South Africa, among others. There are pros and cons to owning emerging market investments, but these stocks are a significant part of the global market.

Investing in emerging markets can help diversify your portfolio, which is one of the reasons that some investors do it. There are, however, risks associated with investing in emerging markets that investors should be aware of.

Understanding Emerging Markets

Investing in emerging markets, or even if you plan to open an IRA and use it to add foreign stocks to your portfolio, may prove to be a part of a successful investment strategy. If, that is, you understand what you’re investing in.

Emerging markets are economies that are in the middle between the developing and developed stages. Emerging markets risk can be high since these areas often see rapid growth and high volatility with booms and busts. Some of the most well-known and biggest countries that investors may look to invest in include China, India, Brazil, and South Korea.

Emerging market investments are generally seen as a higher-risk area of the global stock market. Volatility can spike during periods of political upheaval and when emerging market recessions strike.

As investors get older, risk must be managed through diversified investment plans. You might consider reducing emerging market exposure in your portfolio as your time horizon shortens and retirement nears.

Why Invest in Emerging Markets?

Emerging market investments have been popular for decades. It became easy to own a broad emerging market index fund within an investment portfolio in the early, when exchange-traded funds (ETFs) gained popularity.

The decade of the 2000s featured strong outperformance from the high-risk, high-reward profile of emerging market investments. But volatility in these markets has also been a factor.

People like to invest in areas of the stock market that exhibit rapid growth potential along with having the potential for diversification. High economic growth rates, such as those in China and India, often attract investors seeking to benefit from stocks of those nations. Indeed, there can be periods like the 2000s when strong bull markets take place.

Moreover, owning high-growth areas within a tax-advantaged account can be a savvy retirement savings strategy. This can be helpful when choosing a retirement plan.

Can You Build a Retirement Portfolio With Emerging Markets?

It’s possible to build a segment of a retirement portfolio by investing in emerging markets. Also consider that emerging market bonds are a growing piece of the global fixed-income market.

In addition, owning emerging market investments in retirement accounts is possible via ETFs and both active and passive mutual funds. Moreover, many 401(k) plans offer an emerging markets fund, too.

When thinking about investing in emerging markets, keep in mind that emerging market stocks comprise a fraction of the overall market. Emerging markets stocks represent 27% of the global stock market.

Pros of Investing in Emerging Markets

There are many pros and cons of investing in emerging markets. When you start saving for retirement, it may be a good time to think about investing in emerging market stocks, since you’d likely have a relatively long time horizon to weather volatility.

Here are some of the pros of investing in emerging markets.

Opportunity to Generate Returns

Investing in emerging markets may present the opportunity to generate returns in your portfolio, although it does assume risks, too.

Also consider that more than 80% of the world’s population lives in emerging market countries, while just 27% of the global stock market is weighted to them. Investing for retirement could have at least some exposure to this area for risk-tolerant individuals.

Diversification Benefits

International investments can help offset the ebbs and flows of U.S. stocks through diversification. Consider that the domestic equity market is more than 60% of the global market. So if the U.S. goes into a bear market, foreign shares might outperform. Retirement investing should have a diversified approach.

Cons of Investing in Emerging Markets

Emerging markets can be volatile, and they expose investors to a host of risk factors. Political, economic, and currency risks can all hamper emerging market investments’ growth.

Due to the many risks, it’s common for retirement investors to tone down their stock allocation as they approach retirement. Here are some potential downsides to investing in emerging markets.

Potential Underperformance

Emerging market stocks have underperformed in recent years for a host of factors – such as the global pandemic, and military conflicts in Europe and the Middle East. So, it’s important to consider that these stocks could underperform domestic stocks in the future as well.

Correlations Might Be Changing

Some argue that emerging markets today have more correlation to other markets, so having exposure might simply expose someone to the risks and not the benefits.

High Volatility

Investors of all experience levels might want to steer away from the boom-and-bust nature of emerging markets. The process of evolving from an emerging market to a developed market is usually fraught with risk. In some areas, political turmoil might cascade into a full-blown economic recession.

Emerging market fixed-income investors can also suffer when high-risk currency values fall during such periods of volatility. Back in 1998, the “Asian Contagion” was an emerging markets-led debacle that caused a big decline in markets across the globe.

Uncertainty in China

China is now the biggest weighting in many emerging market indexes, up to one-third in some funds. That can be a lot in just one country, particularly in one as uncertain as China, given its one-party controlled economy.

Start Investing for Retirement With SoFi

Building a retirement portfolio often includes owning many areas of the global stock market. Emerging market investments can play a pivotal role to ensure your allocation has higher growth potential, but you must be mindful of the risks.

It’s possible to invest in emerging markets through a variety of means, including through a retirement account, such as an IRA. But keep the risks in mind, along with your overall investment goals and time horizon.

FAQ

Is it worth investing in emerging markets?

Strong growth potential and diversification benefits are reasons to own emerging markets for your retirement portfolio. That said, emerging markets are a small part of the global stock market. A diversified retirement portfolio should include this slice of the market, but investors also must recognize the risks. There are periods during which emerging market investments can underperform the U.S. stock market.

What is the best emerging market to invest in?

When figuring out emerging markets, you might be curious which one is the best. It is hard to say there is one in particular. Emerging market risk can be high, so to help mitigate that, owning the entire basket can help ensure the benefits of diversification.

Should my entire retirement portfolio be in emerging markets?

Building a retirement portfolio with emerging markets is common but putting all your eggs in the emerging market basket might not be the wisest move. Young investors can perhaps own a larger weight in this volatile equity area, but older investors should think about winding down their emerging markets stock exposure as they near retirement.

Photo credit: iStock/Kateywhat

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q324-051

Sep

2024

How Does a Thrift Savings Plan (TSP) Loan Work?

By Austin Kilham | Life & Career, personal_loan, Preparing for Retirement | Comments Off

Thrift Savings Plans (TSPs) are retirement plans for federal employees and members of the uniformed services. They offer the same kinds of benefits and tax advantages that private employers can offer their employees through a 401(k).

Like 401(k)s, TSPs allow savers to take out loans from their own savings. Borrowing against your retirement can be risky business, so it’s important to understand the ins and outs of TSP loans before you make a decision.

Key Points

• Thrift Savings Plan (TSP) loans allow federal employees and uniformed service members to borrow from their retirement savings, with repayment and interest going back into their own account.

• There are two types of TSP loans: General purpose loans, which require no documentation and have repayment terms of 12 to 60 months, and primary residence loans, which require documentation and have repayment terms of 61 to 180 months.

• Pros of TSP loans include low interest rates, quick access to funds, simple repayment through payroll deductions, and no credit check required.

• Cons of TSP loans involve reducing retirement savings, potential tax implications if not repaid within 90 days after leaving employment, and no impact on building credit as they are not reported to credit bureaus.

• Alternatives to TSP loans include credit cards, passbook loans, signature loans, and personal loans, each offering different benefits and considerations depending on the borrower’s financial situation.

What Are Thrift Savings Plan Loans?

A TSP loan allows federal workers and uniformed service members to borrow from their retirement savings. They must pay interest on the loan; however, that interest is paid back into their own retirement account. In 2024, interest rates are 4.50%, typically lower than the rate private employees pay on 401(k) loans.

Before you can borrow from your account the following must be true:

• You have at least $1,000 of your own contributions invested in the account.

• You must be currently employed as a federal civilian worker or member of the uniformed services.

• You are actively being paid, as loan repayments are deducted from your paycheck.

• You have not repaid a TSP loan in full within the last 30 days.

How Do Thrift Savings Plan Loans Work?

There are two types of TSP loans. General purpose loans may be used for any purpose, require no documentation, and have repayment terms of 12 to 60 months.

Primary residence loans can only be used to buy or build a primary residence. They must be repaid in 61 to 180 months, and they require documentation to qualify. You cannot use primary residence loans to refinance or prepay an existing mortgage, add on to or renovate your existing home, buy another person’s share in your home, or buy land only.

Recommended: Recommended: Common Uses for Personal Loans

Pros and Cons of a Thrift Savings Plan Loan

As you weigh whether or not it’s a good idea to borrow from your retirement savings, consider these pros and cons.

Pros of a TSP Loan

Chief among the advantages of borrowing from a TSP are the relatively low interest rates compared to most other loans.

What’s more, you can get access to funds pretty quickly and repayment is simple, coming from payroll deductions. Also you don’t need to submit to a credit check to qualify for the loan.

Cons of a TSP Loan

Despite the benefits, borrowing from a TSP is often considered a last resort due to certain disadvantages.

First and foremost, when you borrow from your retirement you are removing money from your account that would otherwise benefit from tax-advantaged compounding growth.

If you leave your job with an unpaid loan, you will have 90 days to repay it. Fail to meet this deadline and the entire loan may be reported as income, and you’ll have to pay income taxes on it.

In addition, TSP loans are not reported to the credit reporting bureaus, so they don’t help you build credit.

Does a Thrift Savings Plan Loan Affect Your Credit?

TSP loans are not reported to the three major credit reporting bureaus — TransUnion, Equifax, and Experian — so they do not affect your credit score.

How Long Does a Thrift Savings Plan Loan Take to Get?

Applying for a TSP is a relatively simple process. You can fill out an application online on the TSP website . There is a $50 processing fee for general purpose loans and a $100 fee for primary residence loans. Borrowers who are married will need spousal approval before taking out a loan.

Once the application is approved, borrowers typically receive the loan amount via direct deposit or check within three business days.

How Much Can You Borrow From a Thrift Savings Plan?

The minimum you have to borrow with a TSP loan is $1,000. Rules for determining your maximum are rather complicated. You’ll be limited to the smallest among the following:

• Your own contributions and their earnings in your TSP.

• $50,000 minus your largest loan during the last 12 months, if any.

• 50% of your own contributions and their earnings, or $10,000, whichever is greater, minus your outstanding loan balances.

According to these rules, $50,000 is the most you can borrow, and you may be limited to as little as $1,000.

Should You Take Out a Thrift Savings Plan Loan?

Because a TSP loan can have a lasting effect on your retirement savings, you’ll want to be sure to exhaust all other loan options before deciding to apply for one. If you are experiencing financial hardship or poor credit has made it hard for you to qualify for another type of loan, a TSP may be worth exploring.

Thrift Savings Plan Loan Alternatives

Before choosing a TSP loan, take the time to research other alternatives.

Credit Card

Credit cards typically carry very high interest rates. The average interest rate as of August 2024 is 27.62%. That said, if you use a credit card to make a purchase and pay off your debt on time and in full at the end of the billing cycle, you will not have to pay interest on your debt.

Credit cards only get expensive when you carry a balance from month to month, in which case you’ll owe interest. What’s more, the amount of interest you owe will compound. In order to carry a balance, you must make minimum payments or risk late penalties or defaulting on your debt.

Passbook Loan

Passbook loans allow you to borrow money at low interest rates, using the money you have saved in deposit accounts as collateral. That money must remain in your account over the life of the loan. And if you default on the loan, the bank can use your savings to recoup their losses.

Signature Loan

Unlike passbook loans, signature loans do not require that you put up any items of value as collateral. Also known as “good faith loans,” signature loans require only that you provide your lender with your income, credit history, and your signature. Signature loans are considered to be a type of unsecured personal loan.

Personal Loan

A personal loan can be acquired from a bank, credit union, or online lender. They are typically unsecured loans that don’t require collateral, though some banks offer secured personal loans that may come with lower interest rates.

Loan amounts can range from a few hundred dollars to $100,000. These amounts are repaid with interest in regular installments.

Personal loans place few restrictions on how loan funds can be spent. Common uses for personal loans range from consolidating debt to remodeling a kitchen.

The Takeaway

For borrowers in a financial pinch, TSP loans can provide a low-interest option to secure funding. However, they can also have a permanent negative impact on retirement savings, so it makes sense for borrowers to explore other options as well.

SoFi offers low fixed interest rates on personal loans of $5,000 to $100,000 and no-fee options.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What does TSP loan stand for?

TSP stands for Thrift Savings Plan, a retirement account the federal government offers to its civilian employees and members of the uniformed services.

What is a TSP loan?

A TSP loan allows Thrift Savings Plan holders to borrow from their retirement account. Loans are repaid automatically through payroll deductions, and interest payments are made back to the account.

How long does it take to get a TSP loan?

Once processed, the proceeds of your TSP loan will generally be disbursed within three business days.

Photo credit: iStock/SDI Productions

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOPL-Q324-029

Sep

2024

Achieving Retirement Readiness When Your Employees Are Struggling with Debt

By Walecia Konrad | Preparing for Retirement | Comments Off

Most workers hope to be free from financial responsibilities such as debt by the time they reach retirement age. But for a growing number of employees in the U.S., debt is proving difficult to shake. Just like younger employees, older workers are experiencing increasing levels of debt, including credit card balances and, surprisingly, student loan debt.

Nearly three in four Americans age 50 and over carry some form of debt, according to the 2023 AARP National Debt Survey. Among those surveyed that carry debt, 61% feel it is a problem and 16% feel it is a major problem. For borrowers ages 50 and older, debt not only inhibits retirement savings but can also mean needing to work far longer than they had planned. Taking debt into retirement can be particularly problematic, since retirees may have fixed incomes that make repayment more difficult.

Understanding Good and Bad Debt

Of course, some debt can be essential to smart financial planning for your employees. Taking out a low-interest mortgage for a home, for example, can be a wise investment that increases an individual’s net worth, while increasing their quality of life.

But high-interest credit card debt can significantly hamper an employee’s financial wellness, including retirement readiness. Unfortunately, 60% of Gen Xers (ages 44 to 59) and 48% of boomers (ages 60-78) have credit card debt, and more than half of those borrowers have been carrying it for over a year, according to a June 2024 Bankrate survey.

For a growing number of employees, student debt is also standing in the way of retirement planning — and not just for recent grads. More than 2.2 million people over the age of 55 have outstanding student loans, significantly impacting how much they are able to save for retirement, according to a study by the Schwartz Center for Economic Policy Analysis, a think tank within The New School’s department of economics.

The Center also found that half of all debtors over age 55 who are still in the labor force are in the bottom half of income-earners, making their situation particularly precarious. These borrowers may struggle to achieve financial stability later in life and be forced to delay retirement.

What HR Pros Can Do for Older Employees Carrying Debt

The good news? It’s likely you already have plenty of benefits on hand that can help with the debt/retirement readiness dilemma. It’s a matter of making sure these benefits are flexible enough to be targeted toward and communicated to older workers. The following steps can help ensure that your organization is offering the benefits your employees — of all ages — need to adequately prepare for retirement.

Beef Up Your Debt Counseling Services

Effective debt management is crucial for the financial well-being of any employee. But for older employees, who have less time to save for retirement and may soon be facing a decline in income, debt can be an even more pressing concern.

Review your financial planning and debt counseling services — whether they are implemented in-house or through a vendor. Make sure that debt counseling is delivered in a way that addresses employees at different ages and stages of life. You may even want to consider segmenting debt counseling by age so the solutions accommodate older employees with a different debt payback and retirement planning time frame.

Review Your Student Loan Repayment Benefits

Student loan repayment benefits are often geared toward recruiting and retaining younger employees. And that’s great. But these benefits can also be a secret weapon for your 50-plus crowd too. Let’s take a closer look.

• Employer-sponsored student loan repayment. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, employers can contribute $5,250 annually per employee toward tuition reimbursement or student loan payments on a tax-exempt basis through 2025. This can be a big bonus for recent grads. But do your older employees know this benefit is available for their own long-term student debt too?

• Matching 401(k) contributions for student debt repayment. The Secure Act 2.0, formally authorizes matching contributions for student loan repayment, allowing companies to match employees’ qualified student loan payments with contributions to their retirement accounts, including 401(k)s, 403(b)s, SIMPLE IRAs, and government 457(b) plans. This program may seem designed to benefit young employees, who may be choosing between paying off their student loans and contributing to their retirement accounts. But don’t overlook the fact that older employees (who still carry their own student debt or took out Parent PLUS loans to help pay for a child’s college education) could get a boost from this benefit as well.

Keep Employees Up to Date on Student Loan Forgiveness

What will happen to the income-driven repayment plan Saving on a Valuable Education (SAVE), currently on pause, is still unclear. But no employer wants their employees to miss out on these and other lucrative benefits, or fall behind on the latest student loan news.

Consider offering online education tools and personalized counseling support to help employees — from recent grads to older borrowers — navigate the ever-changing landscape of repayment and forgiveness programs. At the same time, it’s crucial to make sure your team has the resources to stay current and relevant to your employees.

Tailor Retirement Counseling to 50-Plus

Whether your older employees are worried about debt or not, retirement planning changes once your employees enter their fifties and beyond. Consider offering access to retirement advisors who can assess older employees’ retirement preparedness and offer strategies to help them accumulate retirement savings, while paying down debt.

Educating employees on retirement savings catch-up opportunities — and encouraging them to take advantage of them — can further boost employees’ retirement readiness. Currently, adults age 50 and older can make additional contributions to their retirement accounts. Under SECURE 2.0, individuals making at least $145,000 annually can make a catch-up contribution with after-tax dollars starting in 2026.

The Takeaway

Understanding the connection between debt and retirement readiness among all of your employees, but especially those nearing retirement, is a top challenge for benefits pros.

Sofi at Work is here to help with financial education resources, platforms, and tools you need to make sure your older employees are retirement ready.

Photo credit: iStock/LaylaBird

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2025 Social Finance, LLC. All rights reserved. Information as of November 2025 and is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOAW-Q324-007

Aug

2024

Understanding a Retirement Gap Analysis

By Mike Zaccardi, CMT, CFA | invest, Investing, Preparing for Retirement | Comments Off

A retirement gap analysis helps individuals identify a potential shortfall between how much they have saved and what they will need in retirement.

Tallying all accounts, projecting ahead, then comparing that amount to how much a fully funded retirement costs, given your unique circumstances, can help people bridge the financial gap between the present and retirement. It’s a great way to visualize how you are tracking towards your retirement goals.

What Is a Retirement Analysis?

A retirement analysis is typically a report a financial advisor creates for individuals who want to know if they are on track for retirement. The analysis can also be done using online tools. Saving for retirement is an important process for those who are looking forward to a secure future with a steady stream of income.

Knowing the difference between what you have saved versus what you will need in order to retire on time is valuable information to determine if you are on track for retirement. If necessary, you can then take extra steps to boost your savings rate once you have a retirement gap analysis and risk assessment performed. This might include such actions as changing your investing strategy or considering annuities, for instance.

A retirement gap analysis considers a range of retirement assets. Your 401(k) through your employer, any individual retirement accounts you might own, annuities, individual taxable brokerage accounts, and even Social Security are common assets to tally in a retirement gap analysis. The sum of those assets is then compared to what you will need in the future, so that you can retire with confidence.

How Do You Conduct a Retirement Gap Analysis?

Conducting a retirement analysis can be done using online tools or by meeting with a financial advisor. It’s all about knowing when you can retire. Often, individuals will take action to improve their financial habits and retirement savings when they see what they must do.

What Goes Into a Retirement Gap Analysis?

For example, a retirement gap on a chart can be a powerful visual to inspire people to save more. Performing a retirement analysis requires careful input of all assets and some assumptions about future rates of return, as well as a person’s spending habits and goals in order to determine how long their savings and other assets may last.

Assets and liabilities are analyzed, and future cash flow is projected. Conducting a retirement analysis also includes estimating how long somebody might live. Longevity risk is a key consideration, and Social Security and annuities can help reduce the risk of running out of money. There are many facets to performing a retirement gap analysis. Seeking out the help of an experienced fiduciary advisor may be helpful so that you are confident in your retirement plan.

How Does Communication Come Into Play?

A critical factor of a retirement analysis is the communication aspect. This is where a financial planner could potentially show their skills.

Simply looking over investment accounts and seeing numbers on a spreadsheet might not cause people to change course on their journey to retirement. Communicating a retirement gap in the right context can help drive home the message that saving more today will lead to a better tomorrow.

How Does a 401(k) Plan Factor Into the Analysis?

A high-level retirement gap analysis should be mixed in with detailed cash flow planning.

Your 401(k) plan is a major account that is assessed during a retirement analysis. An employer-sponsored retirement account is a large part of many workers’ overall retirement plan. A 401(k) gap can be found by analyzing the value of a participant’s pre-tax and Roth accounts versus what they will need to retire.

A 401(k) account often features an employer matching contribution, which is almost like free money so long as you meet the plan’s matching contribution requirements. Many plans will match, say, 50% of the employee’s contribution up to 6%. For a $100,000 salary, that means $3,000 per year of employer contributions, in addition to $6,000 from the employee. That’s $9,000 per year.

A 401(k) account, among other retirement plans offered through work, is typically a major piece of someone’s retirement asset pie. The process to increase contributions to it is generally easy to do. Moreover, the auto-enrollment and auto-escalation features are tools that can help more people save more for retirement so that their 401(k) gap shrinks over time. A 401(k) analysis can be helpful for workers young and old.

Retirement Gap Analysis Example

Let’s run through a retirement gap analysis example to better show the steps involved.

Retirement Gap Analysis, Step-by-Step	Rationale
Retirement Income Assessment: Summing all retirement savings accounts to find a portfolio value.	Identifies any potential shortfall between required monthly income and total projected income between Social Security, retirement plans, and other accounts.
Review liabilities and future spending habits.	No retirement gap analysis is complete without a thorough assessment of what you owe and current and future spending.
Analyze changes to an individual’s retirement date.	Can make arriving at retirement easier if more time is allowed to increase saving.
Strategize about Social Security options.	Delaying benefits until age 70 will increase total payout; might reduce longevity risk.
Outlining steps to take to shore up retirement income.	Increasing a 401(k) contribution rate can help narrow the retirement gap. Reducing spending and increasing your savings rate are other actions.

How to Calculate Retirement Income

Knowing if your 401(k) is enough is important, but so too is a broader look at your assets and liabilities along with what income to expect in retirement. No retirement gap analysis is complete without it.

Calculating retirement income can be done using various online calculators, but you might want to sit down with a financial planner to map out what income you, personally, will need in retirement. Variables like your spending habits, inflation, discounted cash flow rates, and possible risks all must be considered.

You can also leverage the Social Security Administration’s Retirement Estimator calculator to find out what you should expect to receive when you decide to retire. While the output is just an estimate, it can go a long way toward bridging your retirement gap if you have a gauge of what income you will have in retirement.

Another way to calculate retirement income is to sum up your retirement assets, assume a contribution rate between now and retirement along with a rate of return, then take that asset base as an amount from which to draw income during retirement.

Many planners use the “4% rule”, which states that a retiree can withdraw up to 4% of their retirement account value each year without a high risk of running out of money. This is just a rule of thumb, however, and it might not work as well today as it did decades ago.

Investing for Retirement With SoFi

Identifying where you are on your retirement journey is an important part of financial planning. Doing a retirement gap analysis is an essential part of that process. As time passes, our lives and lifestyles, our goals, and often our physical health can change. All these factors can impact how much we’ll need to spend in the future.

By conducting a retirement gap analysis to identify any shortfalls in savings, it’s possible to make adjustments, and course-correct to get savings goals on track.

Easily manage your retirement savings with a SoFi IRA.

FAQ

What is a retirement gap?

A retirement gap is a difference in the amount you have saved for retirement versus how much you will need. A retirement gap analysis can be performed to help identify how much more you will need to save for retirement. Once you know the amount, you can then take steps to boost your savings and investment accounts so that you can retire on time.

How do I find out if I have a retirement account?

Many individuals have a 401(k) or another retirement plan through their employer. Check with your HR department to see if there is an account set up for you. You might also have retirement accounts established on your own through investment brokerage companies. Also consider that you can likely collect a monthly Social Security benefit in retirement. Be sure to check with the Social Security Administration.

Will my retirement account be enough for me?

This is a tough question, but an important one. Knowing how much you will need for retirement is crucial to developing a retirement savings strategy and living a confident retirement. You may want to meet with a financial advisor to develop a plan. You can also use online resources, tools, and calculators to help determine if your current portfolio is enough to fund your retirement.

Photo credit: iStock/MicroStockHub

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOIN-Q324-020