Throughout their lives, most dream about being able to retire. Retirement means freedom from the daily grind. But, in order for that to happen, retirement planning has to occur. This article will help get you started.
Determine just how much money you will need in retirement. Studies show that the average American requires at least 75 percent of their normal income to survive during retirement: that’s 75 percent of the salary that you are earning right now. If you make less money, you may need 90%.
It is never too early to start saving and planning for your retirement. Even if you need to start tiny, start today. As you start to make more money, you should put more back into savings. Placing your money in an interest bearing account will allow your money to grow over time resulting in greater earnings.
Partial Retirement
Consider partial retirement. It may be wise to think about partial retirement if you are interested in retiring but are not in a financial position to do so just yet. This means cutting down your hours at your current job. This will give you the opportunity to relax while earning money and transitioning to full retirement.
Make sure that you are adding to your 401k every paycheck. You pay into it before taxes, and this lets you save more. When your company matches the contributions you make, your money will grow even faster!
Look at your portfolio for retirement quarterly. If you do it more, you may become overly preoccupied with minor changes in the market. Less frequently may cause you to miss some opportunities. Work with a professional to find the right places to put your money.
Reduce your expenditures prior to retirement. You want to be prepared for any situation that may occur. You may run into some unexpected financial challenge.
A lot of people think that when they retire they can do things that they have never had time for in the past. Time can get away from us very quickly, however. Plan your activities in advance to organize properly.
Yearly Limit
If you are older than 50, you can catch up on IRA contributions. There is typically a yearly limit of $5,500 that you can save in your IRA. If you are older than 50, this yearly limit grows to around $17,500. This is perfect for those people who got a late start, but still want to save big.
To get a good feel for how much money you should be saving for retirement, plan the money you need based on money you spend now. A good rule of thumb is to plan on having about 80% of your current income available in retirement. However, you must keep an eye on your expenditures. Since you will have more free time, you may be tempted to spend more as well.
Look into finding other retirees that you can spend time with. Finding a friendly group of individuals who are also retired can help you enjoy your free time. You can engage in a number of fun activities with this group of friends. You can also have a group of people around to support you when that is needed.
With retirement coming, it’s important that you get all your loans paid in full as quickly as possible. Your car and mortgage payments will be easier on you if you can pay off a big portion of them before you retire. By getting rid of all the obligations you can now, you will be able to better enjoy your retirement.
Downsize if you need to save or stretch your cash. Your mortgage may be paid in full; however, the maintenance and utilities on a large house can put a dent in your retirement funds. Think about getting a smaller place to live. You will save a lot of money this way.
When you retire, you may want to spend time with your grandkids. Your kids may need help with daycare. Try spending time with the grand-kids by having fun and planning activities that you can all do. Avoid getting over committed by agreeing to watch the grandkids all the time.
Don’t ever withdraw from your retirement savings unless you have retired. If you do, you’ll lose money you need when you retire. There could also be withdrawal fees and tax losses. Make a promise to yourself to not touch it until you reach retirement.
Find out as much as you can about Medicare and its benefits to you. It is important to know how these will work together. By increasing your knowledge, you can help ensure you have the money needed to pay for your medical bills once you retire.
Social Security
Social Security should never be considered as a sole means of funding your retirement. Social Security may offer you some financial benefit but is is usually not enough to retire comfortably on. Usually you’ll only get around 40 percent of the income you made when you worked from Social Security and that generally isn’t enough.
If you have a hobby that you enjoy, think of ways to potentially monetize it. Hobbies like sewing, painting, and woodworking are enjoyable hobbies that you may like to do. Get yourself involved in a few projects and see if they can pay off financially.
You already know you would like to relax and have fun when you retire. The tips here will help you make that dream a reality. Remember to start planning now or your retirement years will be here sooner than you think. Have fun and enjoy!