If you were told that you need to retire just one year from now, would you be in a position to live comfortably? Perhaps you’re younger and don’t think you should worry about it yet. The more planning you put into your retirement, the greater payoff you will receive. With some careful planning, there are people who get to retire early. While you are reading this advice, think about what your options are.
Determine what your needs and expenses will be in retirement. You need about 75% of your current income to live during retirement. Workers in the lower income range can expect to need at least 90 percent.
Cut back on miscellaneous items you often purchase during the week. Start off by looking at your expenses and ascertaining which ones you can get rid of. Expenses such as these can accumulate over a period of 30 years, and if you eliminate them, it provides you with a big chunk of extra money.
Start a savings account while you’re young, and contribute to it regularly throughout life. Even if you cannot contribute a lot, something is better than nothing. Increase your savings as your income rises. Placing your money in an interest bearing account will allow your money to grow over time resulting in greater earnings.
Make regular contributions to your 401k and maximize your employer match, if available. You can save greater amounts through this because the money is not taxed. If you have an employer that matches what you contribute, you’re basically getting free cash.
Review the retirement plan offered by your employer. Sign up for your 401(k) as soon as possible. Research your plan carefully, what you can contribute and when you can access the money.
Investments are important to consider for retirement. If you can add diversity to your portfolio, it will pay off handsomely. It will also lessen your risk.
If it’s possible, you may even want to consider waiting a while before digging into your Social Security income. When you wait, you can count on collecting a larger monthly payment. If you have other income or retirement funds, this is easier to do.
Many dream about retiring and exploring all of the things they did not have time for in their earlier years. Time tends to move faster as you get older. Advance planning can help mitigate this.
Don’t forget about your health care needs in the long-term. Your health is likely to get worse as the years go on. In a lot of cases this decline means healthcare expenses that can cost a bit. If you have factored this into your plan, you’ll be well taken care of should the need arise.
Pension Plan
Check out your employer’s pension plan. Learn all of the details for these plans. If you’re changing jobs, look into whether you can keep your current plan or not. See if you will get benefits from your earlier employer. Perhaps you are eligible for benefits from the pension plan of your spouse.
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. It is probably safe to estimate that your living expenses will be approximately 80 percent of your current expenses since you will not have to pay work-related expenses, such as wardrobe, transportation costs, etc. Don’t spend money that you can’t afford to spend.
Look into finding other retirees that you can spend time with. Having a great group of retired folks to spend time with is wonderful. With these friends, you can all enjoy retirement activities together. You will also have a good support group that you can use when you need to.
Social Security
Do not rely on Social Security to cover your retirement. Social Security is likely to provide less than half of your present income, which is not enough to live on. To live comfortably in retirement, your retirement plan should provide between seventy and ninety percent of your current living costs.
Spending time with your grandchildren is easier when you are retired. Your children may need help with child care. Plan enjoyable activities to share with your grandchildren. Try to avoid dedicating all of your free time to them.
No matter how much you might think you need the money, never dip into the money you’ve already set aside for retirement before you’ve actually reached that point. You will lose money otherwise. In addition, you may need to pay a penalty for early withdrawal, plus you will be losing tax benefits. You want the funds available for your retirement.
Social Security should never be considered as a sole means of funding your retirement. It will be helpful, but it’s generally not enough to live on. Social Security benefits normally provide you with approximately 40 percent of the amount you earned when you were still in the workforce.
You need to get all of your debts cleared before you consider retiring. While it’s a good thing for your mind and body to retire, it can be hard on you financially if you still have old loans that need to be paid off. Reduce all of your expenses to stay as happy as possible.
How do you think your retirement should be planned for? Are you planning to live on the cheap or live it up? Whatever you choose to do is fine, but you must plan for your retirement regardless. Put these tips to use and have fun in your last years.