1 – Start Saving Early:
Retirement is expensive! Step one of planning for retirement is to save as much as you can as early as you can. When you stop working, you want to maintain your standard of living. To do that you will need at least 60% of your pre-retirement income. Find out if your employer offers a 401(k) plan, it will be one of the best methods of saving for retirement. Once you don’t have to spend money on your home outright, you can adjust your monthly budget so that more of your income goes towards savings and investments.
2 – Always Ask Questions:
Your retirement is worth doing right! Most people were taught to ask questions about things they do not understand. Sounds simple, right? That’s because it is! Remember to educate yourself. Tips can help point you in the right direction, but you’ll need more information regarding your personal retirement goals. Feel free to contact us using the Ask Us Anything section.
3 – Taxes:
Let’s face it; taxes are always going to be a part of any financial plan, planning for retirement is no exception. While no one can see what is going to happen in the future it is best to plan for the worst-case scenario. Understanding taxes and wealth management is an incredibly important part of planning your retirement.
4 – Plan for a Long Life:
These days, people are living longer then before so while you are planning for retirement ensure that you take into account that you could live twenty years or more after you retire. This means planning is even more important than it was for the last generation. Set your retirement goals, but be sure you take into account a longer time horizon.
5 – Think about your Goals:
When planning for retirement you need to consider your goals at every stage of planning, and at every age. Instead of retiring all at once, you should consider retiring in phases. This would make the whole journey easier and smoother for you. The closer you get to retiring the more often you should check your goals, and ensure that you are going to have enough money to retire comfortably. Retirement doesn’t have to be scary. Retirement is fun and enjoyable when you plan for it financially.
6 – Social Security:
Social Security pays benefits that are on average equal to about 40 percent of what you earned before retirement. In the past, everyone started drawing on Social Security at age 62, and at that age they received full benefits. The age for full retirement has been increased, and may be increased even further. The key is to choose when to start drawing your benefits. You may be able to estimate your benefit by using the retirement estimator on the Social Security Administration’s Website. Remember, Social Security is only one source of retirement income; the other two are normally your employer’s retirement plans and your personal savings.
7 – IRA – Individual Retirement Account:
Personal savings will make up a large portion of your retirement income. A good way to build personal assets for retirement is to open an IRA. When you open an IRA, you have two options – a traditional IRA or a Roth IRA. The tax treatment of your contributions and withdrawals will depend on which option you select. A Roth IRA has contribution limits that vary according to your age. Currently, you can contribute up to $5,500 a year into an IRA, or $6,500 a year if you’re over age 50. You can also start out with much less.
8 – Hands Off your Retirement Savings:
When investing your money, it’s important to understand all the rules. Withdrawing early from your retirement savings may cause you to lose principal and interest. Also, you may lose tax benefits or have to pay penalties for early withdrawals. If you have to change jobs, you can leave your savings invested in your current retirement plan, or roll them over to an IRA or your new employer’s plan.
9 – Inflation:
Typically, seniors do not spend as much on food, but their medical costs increase greatly. The cost of living is going to continue to rise, for this reason you must add inflation into the equation while planning for retirement. Medical costs are already high and are going to continue to rise. Employers’ are cutting coverage’s, and the government could cut how much coverage will be provided by Medicare.
10 – Pay off your debts:
If you still have outstanding debts, you should start paying them off now. You could split your income into three categories. One section goes for your expenses, the second section for savings while the last section should be dedicated to paying off any outstanding debts. Think about cutting down expenses that are long term like substituting buying a brand new car for a used car.
11 – Housing Relocation:
Many people plan on the equity in their home as part of their retirement income. If this was your plan, you may need to reevaluate the value of your home, and how much it will help with your retirement plan. New retirees’ often find that they don’t need the large houses they bought when they were younger. The thing with living in expensive places is that you might not be able to save much because cost of living is high. You may also think about selling your home if the home will not be paid off by the time you want to retire. Some may choose to rent instead of buy because of the freedom of living wherever they choose over being tied down by home repair costs and growing mortgage payments.
12 – Long-Term Care and Health Care:
The older you become, the more likely it is that you will require some type of long-term assisted care. The reason that people are living longer is because of new medications and advancements in health care, all of this cost money. You need to account for the increased cost of health care due to inflation. It requires a lot of money and good health insurance to keep yourself healthy as you age. Many people do not plan well for this, but is a necessity because we will live much longer than past generation.
13 – Plan Review:
Your life is constantly changing and the same can be said for your financial needs. Make sure that your investment plan is still on track to help you reach your financial objectives. The general rule of thumb is every two years, go back to that plan and check to see that it still works for you. Ideally, your budget will shrink as you get older. Examine your goals and significant life events that may have occurred and adjust your plan if necessary. If you continue to live a budget-conscious lifestyle after retirement, you should find that you enjoy approximately the same quality of life without spending as much money.
14 – Ask More Questions:
Remember to educate yourself. Your retirement is worth doing right! Tips can help point you in the right direction, but you’ll need more information regarding your personal retirement goals. Feel free to contact us using the Ask Us Anything section.
(April 2014) Data from the U.S. Census Bureau show that there are 76.4 million baby boomers. Technological and medical advancements have given the baby boomer generation choices that did not exist to previous generations. No matter what your stage of life, there is no better time than the present to build stability and security for your retirement years. Remember, these tips can help get you started, but you’ll need more information regarding your personal retirement goals. Feel free to contact us using the Ask Us Anything section.