One of the hottest topics in financial planning is retirement. How much does a person need to support a good life? When is the best time to start saving? Even if retirement planning isn’t the first thing on your mind, it IS important to get started as soon as possible. The worst scenario is to postpone the process until later when you might find yourself short on resources when you need them.
It is never too late or too early to prepare for your future, but the earlier you start, the better. Here are some retirement planning strategies that can help you achieve your overall objectives:
1. Make a Retirement Plan
If you don’t have a comprehensive financial plan with realistic goals for supporting your retirement, now is the right time to do so. Meet with your financial advisor and review your portfolio – investments, real estate, and income – to determine your assets. Develop a budget that estimates the expenses of your desired retirement lifestyle. Analyze which costs are likely to decrease after you retire (clothing, commuting, etc.) and which are expected to increase (medical, travel, etc.), and plan accordingly We’ve created a retirement calculator that you can use to run some figures, and make sure that your current retirement strategy will be enough to sustain you.
2. Estimate Your Sources of Income
Find out how much you can expect to receive in retirement from pension plans, veterans’ benefits, or Social Security. You can access tools to get an estimate of your future Social Security benefits. At first, determine a realistic amount to contribute regularly to your employer-sponsored qualified retirement plan, e.g., a 401(k) plan. Over time, try to maximize allowable contributions to your savings plan and take advantage of the company match, if offered.
3. Assess Your Current Budget
Review your current financial situation by assessing your income and assets versus your expenses and liabilities. There is a common misunderstanding about budgeting. Most people, eager to discuss investments and savings plans, are hard-pressed to consider budgeting as a tool for building assets and security. A budget is a financial plan for spending that can be a valuable tool. By managing expenses, you free up money for saving and investing.
4 Reduce Your Debt
Pay off large bills as soon as possible. Curb your spending to avoid taking on any new debt that could carry over into retirement.
5. Manage Risk
Consult with a qualified professional about your life, health, and disability income insurance policies to determine the amount of coverage for your current and future needs.
6. Get Professional Advice
You don't have to do this on your own. Unless you have expertise in finance, consider getting help from a professional investment advisor. An independent financial advisor will listen to your goals and help you create a financial plan to achieve them. There are various investment options, like stocks, bonds, and money market funds that can be used to build your investment portfolio. Your financial advisor can help you make the informed decisions that will get you closer to your goal of a long and prosperous retirement.
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.