Retirement planning is a vital step for all of us. However, retirement planning is not an easy topic for any of us to jump into since there is quite a bit of fear of the unknown. You can take control of your retirement though, by starting to educate yourself about the process, and putting the building blocks in place by way of a financial plan.
Ideally, you want to be able to enjoy our golden years comfortably without having to worry about running out of money. Planning your retirement is a key component to enable that your ultimate retirement goal comes to fruition. You may ask yourself, what do I need to do to plan for my retirement? A good place to start is by asking and answering some or all of these questions:
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How long will it be before I retire?
- Do I have money already allocated for retirement and if so, will it be enough for me to retire on?
- How much money should I put away for my retirement?
- How should I invest in order to achieve the amount of money I want to retire on?
- How much income will I need to live on to maintain my present and future lifestyle?
These basic retirement planning questions are a keystone for shaping your retirement plan.. Once you have answers to these basic questions, then proceed to start saving for retirement as soon as possible! Other common questions about retirement planning are:
What type of investments are best for saving for retirement?
Stocks, bonds, certificate of deposits, mutual funds, annuities and many other investment vehicles are a great fit for your retirement strategy
What type of account should I open?
This depends entirely on your employment situation, household income, and age. Generally speaking, your company 401k is a great place to start your planning. Many times, employers will match some of your contributions! However, Roth or Traditional IRA's are ideal for kicking off your retirement savings as well.
Where can I expect to withdraw money for my retirement?
Social Security, savings, pension plans, and your investments from 401K plans, certificate of deposits and other investments.
How much money will I need for retirement?
A good rule of thumb is that you will need approximately 60-80% of your current income at the time of your retirement. This will allow you to live the lifestyle you are accustomed to having by the time you retire. However, many people can get by on less.
When should I start saving for retirement?
Now! It doesn't matter what your age is. If you hope to retire someday, you need to start saving sooner than later.
