Planning for your retirement means considering your future and deciding what you can do today to meet your retirement needs. Of course, the earlier you get started, the more time you have to make your retirement dreams come true. But although the best time to start retirement planning was in the past, the second-best time is today.
Retirement planning is much like making your budget now. Except, you look at the expenses you foresee in your retirement and then determine how to create that income flow.
- Developing financial strategies for savings, investments, and expenses now and in the future is the basis of retirement planning.
- Investment options like 401(k)s and individual retirement accounts let you save money and grow your investments with specific tax advantages.
Tips for Retirement Planning
While much of retirement planning focuses on financial strategies, remember that you are really making a lifestyle choice. What you plan to do and where create financial needs, but your financial requirements in retirement are ultimately based on your lifestyle choices.
- Will you work past your 65th birthday?
- How much travel?
- Will your spouse retire at the same time, sooner or later, than you do?
- Can your employer help contribute to your retirement savings?
How Much You Need for Retirement
The amount you need in savings and investments varies from one person to the next. So, how can you determine the right amount as you plan for your retirement?
- Many professionals suggest that 80% of your working income is a reasonable estimate to keep you in retirement.
- Yet, most retirees do not save enough, so they adjust their lifestyles and live on what is available.
With inflation and general economic instability, it is difficult to even estimate how much you might need to retire in 10 years, let alone 20 or 30 years.
So, start as early as you can. Use auto deposits and take advantage of any employer program. Utilize the tax advantages available for retirement planning. Also, check on your investments at least annually to watch the progress. Change what you are doing to plan for your retirement as the financial world changes. And for best results, use a professional to guide your retirement planning.
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