Here are five common retirement planning ideas and what you can
do to take advantage of them. The key is retirement planning starts now, not
decades from now when you are reaching retirement age. 1. Having a plan Surprisingly,
most do not know how much money is needed for retirement. This is being made
much more difficult with inflation playing a major role in finding the right
answer. A retirement plan should consider how long you expect to live, an
estimate of the amount of money you will need, and a description of your
desired lifestyle during retirement. Your plan should have measurable goals
that you aim to achieve. Action item: If you
have a plan, review it for possible revisions. If you do not, consider
getting one put together as soon as possible. 2. Start early enough One
of the most powerful tools for a well-funded retirement is to start saving
for your retirement at an early age. The sooner you start saving, the better
off you will be. Action item: Open a
retirement account and start saving now. Increase the percent of your pay
that you place in tax-advantaged retirement saving accounts. This includes
IRAs, 401(k)s, and other plans. 3. Maximize employer contributions Many
employers have plans available to help their employees save for retirement.
If your company has a pension plan, understand how it works and how much you
can expect to receive upon retirement. If your company has a retirement plan
contribution-matching program, take full advantage of this free money by
making minimum contributions required to receive this employer match. Action item: Review
your employer-provided retirement saving options. Maximize the benefits they
are providing. 4. Consider working after retiring Do
you plan on working during retirement or avoiding work at all costs? Do you
plan on having a pension or Social Security covering all your retirement
needs or none of it? Too often retirees plan the extremes, but reality is
something in between. For example, if you are someone who plans to have your
pension plan fail and Social Security go broke, you may be taking too
conservative an approach. Action item: Create
a range of retirement funding scenarios, not just the worst-case or best-case
scenario. Consider no work or part-time work. Think about some contribution
from Social Security and potential pension income if your employer has a
program. 5. Understand the true nature of your retirement Are
you being realistic in your future retirement plans? Have you correctly
estimated the cost of health insurance? Have you really thought about the
impact of relocating to a warmer climate? How important is living close to
family and friends? Will you really downsize your home after the kids leave? Action item: If you
have a retirement plan that includes relocating or traveling to far-off
places, consider test-driving this idea before you implement it. You may be
surprised at the result. Retirement
should be something to look forward to, especially with a little planning. |