Retirement: Life in the Future - An Interesting Thought.
When should you start planning for your retirement? Right now is always a wise choice.
When it comes to planning for retirement, the earlier you start, the better.
Earlier is cheaper. The sooner you start, the less you may need to contribute—time is your friend.
For example:
Say your goal is $750,000 in a 401(k) or IRA by age 67.
If you start at 35, assuming an average growth rate of 8%, $200 every two weeks might do the trick.
But say you wait until your mid-40s to focus on retirement. That delay might run you almost $500 per pay period to hit the same $750,000 mark.
That said, we recognize that the costs of living in the future are unpredictable. We also understand budget constraints. So, here are some tips to help you map out your retirement:
Review your current financial situation. Here, you analyze your income and assets, comparing them to your expenses and liabilities.
Determine a realistic amount you can contribute. Every two weeks or every month, funding a retirement plan at work (e.g., a 401(k) plan) is a must. In time, try maximizing your allowable contributions. Also, take advantage of the company match, if available.
Consider other retirement accounts. In 2020, you may contribute up to $6,000 to a Traditional or Roth IRA. In addition, those over the age of 50 may contribute an extra $1,000 to these individual retirement accounts.
Cut debt and excessive spending. So often, debt and excessive spending are the leading causes of retirement delays—work toward eliminating bad debt as soon as possible and good debt within a reasonable timeframe.
Keep an eye on your insurances. Review your life insurance policies often, especially if you have a significant other or a family member in your care. Understanding your health and disability policies and what is and is not covered in your plan is also advised.
Understand Social Security. Knowing how much government assistance you can expect from Social Security is also a proactive measure. Incorporating this figure into future budgets will help shape your income distribution plan. For an estimate of future benefits, visit www.socialsecurity.gov.
Finally, know thyself. Try to forecast which expenses will most likely go away in retirement. This may include a mortgage payment or car note, commuter expenses or continuing education for work, or various entertainment forms.
As part of our financial planning services, we dive deeper into your retirement goals, assisting you in the following:
Projecting retirement income needs
Reviewing all assets and liabilities
Analyzing future income streams (e.g., Social Security and/or pensions)
Modeling various scenarios for funding your future cost of living
Noting any surplus or deficit in your savings goals
Discussing various account types and investment options
Designing distribution strategies that emphasize tax efficiency
Explaining the importance of maintaining adequate liquid reserves
Whether you are just getting started or your retirement is around the corner, we consider your full range of present and those you may have in the future.
Ready to Discuss Your Retirement Strategy?
Please schedule an appointment to discuss our planning options or send a message with any burning questions.