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Do you have a retirement plan?
If you were to ask a number of people what they were saving for, you’d get a variety of answers: the latest tech gadget, a new car, a dream vacation, or even those splurge shoes. But the answer you most likely won’t get? Retirement. Saving for retirement isn’t fun, but it is necessary and something we all need to be actively involved in. Unfortunately, only 60 percent of workers are currently saving for retirement and only 13 percent are confident about having enough money for when they do retire.
This four-part article series is meant to take some of the confusion out of retirement planning by helping you to start thinking about your retirement goals, to estimate how much you’ll need in retirement funds, to find ways to save for retirement, and to help you determine what retirement investment options might work best for you.
The first step in retirement planning is to take time to consider your dream retirement.
Think about your retirement lifestyle
Will you continue to work? Where will you live? Do you plan to travel? Determining how you want to spend your newly-found free time and where will help you establish your future expenses.
Estimate your needed retirement income
It’s a good idea to write down every dollar you spend for a span of time, say a week or even a month, to see how much it costs for you to live your current lifestyle. This will give you a sense of what you need monthly to live comfortably.
Locate your retirement savings
Are you participating in a 401(k) plan at your current place of employment? Did you leave any behind at previous jobs? Have you set up an individual retirement account (IRA) or other savings accounts? Tracking down your current accounts helps you understand how much you’ve already saved.
Determine your ideal retirement age
While your gut response might be “tomorrow,” you’ll have to wait until your retirement age to receive your full Social Security benefits. Many workers are choosing to retire later—some due to the economic meltdown, but many also find they enjoy their career and their daily interactions with co-workers and aren’t ready to give it up.
Estimate your retirement benefits
If you are lucky enough to have a pension plan through your employer, request an estimate of your monthly retirement benefits. (You can usually get this from your company’s HR or Benefits department.) You’ll also need to estimate your monthly Social Security benefits. Those planning for early retirement should keep in mind that collecting Social Security benefits before your retirement age results in permanently-reduce benefits.
Begin your retirement planning now
Whether you’ll be retiring in 10 years or 40 years, it’s never too late or too early to begin planning for your retirement. Talk with a financial advisor, check with your employer to see what types of retirement planning services are available to employees, or do some online research. MyMoney.gov has a wealth of information in its Retirement Planning section, including a booklet entitled “Savings Fitness: A Guide to Your Money and Your Financial Future.”
Next in this article series, learn how to estimate the amount you need to save for retirement.
This article contains general information. Individual financial situations are unique; please, consult your financial advisor or tax attorney before utilizing any of the information contained in this article.
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