Golden Rules for a Golden Era –
Just bring them into practice,
Reap the harvest of your careful ways
And Breeze through your retirement days!
The longer you have to plan for retirement the easier it will be to attain your retirement goals. If you wait until you are 50 or 55 to start planning you will have to save a much larger percentage of your salary. But if you plan ahead and stay committed to your retirement goals you can still have a happy stress free retirement..
Calculate How Much You Will Need For Retirement-
Consider the age of your planned retirement and estimate the amount of money you will need then for your expenses by considering that you will probably need about 70% to 90% of your before retirement income in order to maintain your present living standards. Be sure to take inflation into consideration– Adjust your estimate to take into consideration the effects of inflation on your cost of living. To do this you can use the Retirement Planning Calculator.
Become Debt Free Before Retiring-
It’s difficult to fund a retirement with huge debts hanging over your head and virtually impossible to actually retire in that condition. So start by living within your means now and clear any debts that you have accumulated. According to the Bureau of labor statistics the average retiree retires at around 62 and lives about 17 more years. So you have a lot of years to spend in retirement and you need to prepare for them financially.
Financial Retirement Planning –
Relying on Social Security for all of your needs will certainly put a cramp in anyone’s lifestyle if it is available at all by the time you retire. So can you need to start your own IRA or 401(K) retirement savings plan, which includes investing a portion of your salary in stocks, bonds and/or mutual funds. This will allow your retirement funds to grow tax free, thus giving you a larger nest egg to work with. See Tax Deferred Retirement If you are in the U.K. you could consider personal pension plans like SIPP (Self Invested Personal Pension).
In additon to IRA’s, and 401k’s you should take advantage of any traditional company pension plans that are available. These provide basically “free money” some are matching programs while others simply set aside money for you. You should take maximum advantage of whatever is available. Another method of planning for your future is through the purchase of a lifetime annuity plan through an insurance company. See Is a Retirement Annuity the Answer for your Retirement Savings?
Instead of just spending any bonuses or pay raises you get, set aside at least 50% to go toward your retirement fund. After all you were living fine without it so you won’t miss it. When unexpected events happen you might be tempted to dip into your retirement fund but this is generally a mistake because the value of retirement planning is to create a fund that grows on its own. To do this it needs a certain mass. By dipping into it you reduce that mass and set the progress back considerably. You will also be subject to tax penalties which will further dampen the growth of your retirement fund.
As you approach middle age, you should start transferring money from your risky-equities and putting more into relatively safer ventures. The last thing you want is for the market to take a dive and force you to postpone your retirement.
Plan for Health Issues During Retirement-
Explore Health insurance plans which will cover you towards and after retirement. You can also look into long term care plans that will cover you if you become disabled. Start regular health check-ups and maintain your health through exercise and healthy eating habits.
What if Your Retirement Planning Goes Awry?
The longer you postpone retirement (collecting Social Security) the higher your monthly payout. Therefore it may pay to wait until you are 65 or even 67 before you begin collecting. Some couples arrange it so that one begins collecting early while the other waits so that one of the payments is of the larger variety. Of course no one likes to think about it but after you retire, you can always take up a part time job. Perhaps something outside your regular career, doing what you most enjoy. History buffs have become guides at historic sites, ameteur photographers have gotten paying gigs, ohters have taken up writing or even selling their crafts and paintings. The key is to find something that you enjoy that will also put a few extra dollars in your pocket.
I hope these tips will help you toward having an enjoyable retirement.
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