Retirement planning is not for the faint of heart. There is so much to think about that it can be overwhelming and challenging to get started. If you’re procrastinating, find a good financial planner to help you sort things out. He or she can help you plan for retirement by talking about how it helps to know your financial position and the value of all your asset and what to do when it comes to budgeting for retirement and estate planning.
What’s more, a financial planner may suggest the use of conceptual models and financial calculators that you might not have considered. For instance, how do you go about thinking about reverse mortgages? Using a reverse mortgage calculator, a financial planner can help you consider how to cover your essentials right now as well as in retirement.
While, of course, you can do your retirement planning on your own, it certainly helps to talk things over with someone who knows how to help you ensure your lifestyle, prepare yourself for unexpected things, and leave a legacy behind.
Still, before you find a find a seasoned professional to work with, let’s take a brief look at some of the things you should bring up in the conversation.
Retirement Planning Can Begin At Any Age
Ideally, the sooner you start planning the better, but even planning in your later years is better than not planning at all.
The ideal time to plan is under 50. If you miss that window of opportunity, then you might fall under the 50 to 65 year range. However, even if you miss that age range, you can still think about what to do if you’re past 65 years.
Let’s take a closer look at what to consider within these various time frames.
Retirement Planning If You’re Under 50
Here are some guidelines if you’re under 50.
1. Think about what you’ll do when you retire.
Imagine, for a moment, that you don’t have to go into the office anymore. What will you do? Will you start a business? Will you travel? Will you write a book? Will you volunteer for the Peace Corp? Will you become the best grandparent you can be? Thinking in this way will warm up your mind to start thinking about how to fund the time when you will no longer be working from 9 to 5, commuting for long hours, and squeezing in a few precious hours of free time over the evenings and weekends.
2. Begin the savings habit.
Using a retirement planner, you need to run some numbers on how much you can afford to set aside from your salary every month, how much you can afford to tuck into your 401(k), and how much interest you can earn at a realistic rate of return.
Now that you have a better idea of how you should be saving, think about how you can trim your expenses to make it possible to save even more.
3. Don’t just rely on your employer’s retirement plan for you.
Even if your employer has an excellent savings vehicle, look into tax smart ways to save for retirement. For instance, think about whether you would rather open a Roth IRA or a traditional IRA.
Retirement Planning If You’re Between 50 to 65 Years
Here are some guidelines if you’re between 50 and 65 years of age:
1. Fill out your dreams now.
It’s never too late to dream. Get specific about how you would like to live when you’re retired. This tactical thinking will help you avoid postponing your retirement planning. Start thinking about what you can do from this point on. What things have you’ve always wanted to do when you didn’t have to work?
2. Start to catch up on savings.
If you haven’t been saving or you haven’t been saving enough, now is the time to think about it. See if it’s possible for you to make a catch up contribution to your 401 (k) or your IRA.
3. Start taking better care of your health.
If you’ve been too busy working to pay the bills to take better care of your health, now would be a good time to get a medical checkup and do practical things like find the right exercise routine and learn how to eat a healthy diet. If you don’t focus on your health, then you will be spending a large amount of time figuring out how to cover your health-related costs when you retire. Don’t just rely on Medicare. In the future, it may only cover a portion of your costs. Instead, consider opening up a health saving account (HSA) and making regular contributions to it. Your employer might be open to contributing to an HSA because contributions are not considered taxable income and your early withdrawals for medical costs aren’t taxed.
Retirement Planning If You’re 65 Or Older
Here are some guidelines if you’re 65 years of age or older:
1. Set your goals.
Review your situation and see what realistic goals you can set for yourself.
2. Manage your spending.
You need to create a spending plan and a withdrawal rate that will suit your needs. If you need to take out money from your retirement savings, limit it to about 4% for each year. Before you withdraw from any of your accounts, especially tax-deferred accounts, determine the best ways to avoid being slammed by unexpected penalties.
3. Continue to boost your income.
Investigate ways to improve your income stream by adding dividend-paying stock to your financial portfolio or setting up your annuity.
Now that you have a broad outline of how to think about your retirement, seek out a financial planner to work through the details. Even if you’re financially-savvy, it still helps to have someone to discuss things with and stimulate your possibility thinking.
Jayson @ Monster Piggy Bank says
I wanna have a good retirement life, and I will try to change my spending habits and to reach my goals one after another.
It is everyone’s dream to retire with much more savings to enjoy life and get to travel to places around the world. Pauline, thanks for sharing these tips to be financially ready in retirement years.