Tips for Retirement Planning
Are you able to live well in retirement years if you retired early or lost your job at this moment? To answer this question, you may have to look into where you stand financially. These days, you cannot solely rely on Social Security, retirement accounts, or company pension plans. You need to make a good use of tax-deferred savings plans as well.
Plan for the Financial Commitment
- Before anything, plan for how much money you will need every year after retiring from your job. Take into account things like health care expenses if the retirement is early and you don’t qualify for Medicare. One rule of thumb is that, an average person may need around 70% of pre-retirement income in order to live comfortably considering that he or she is in good health.
- Next, try to figure out how you are going to meet those needs. Social Security, annuities, company pensions, and savings are great source of income, but they may not cover all the things that old age lifestyle calls for. So, the haunting question is, will you have enough money when you retire and if not, what can you do about it?
Consult Retirement Planning Projections
If you have projected that your retirement expenses may exceed what you receive through the courtesy of government and previous employer, it is about time to look into other sources. For instance, if that expense is around $40,000 above your retirement income, you may need close to a million to bridge the gap. There are many online tools to help you estimate the exact figure or plan for your early or late start retirement future. These tools created by retirement advisors can also be utilized to select the right combination of stocks, mutual funds and bonds to design a financial portfolio for offsetting the balance needed to live debt free. And the truth is, the earlier you plan for this adventure, the better the outcome. How early depends on how much you want to save.
How to Boost Your Savings
Then there are financial moves that you can make to boost your savings. It is never too late to get started. So, any age is fine to start your retirement planning as long as you are consistent and stick to the plan. Not saving can become fairly expensive in life. So, do not make the mistake of neglecting to fund your account that you are saving for retirement. Just because your business makes a lot of money right now doesn’t mean you don’t need to fund your retirement plan.
As for the plan itself, there are many to choose from for both individuals and businesses. Plans for small business owners such as IRSA, SEP plans, SIMPLE plans, 401K plans have their own merits and disadvantages. Check with your financial advisor to determine what plan is best suited for your unique situation. Keep note of what they suggest and follow it without fail.