How to Make Your Retirement Plan Succeed

You need to plan for retirement carefully in order to live comfortably and securely after employment ends. Now the people are living longer and social security benefits are coming at a later retirement age, it's more important than even to ensure your savings will be adequate. Whether you're already retired or dream of early retirement, that are certain basic steps you can take to ensure the health of your financial goals for retiring.

1. Figure out your retirement age and life expectancy. The Social Security Administration website has a chart that will determine your full retirement age. For most people born after 1959, this will be age 67. As of this writing, if 67 is your full retirement age and you take early retirement at 62, your social security benefits will decrease by 30%.

2. Decide how much annual income you will need to live on after you're retired. Many advisors use a figure of 70-80% of your current annual income, but this number can vary by your current income and wishes for your future lifestyle.

3. Determine how much in total savings you'll need to accumulate by retirement age. The are many free online retirement calculators to help you plan the retirement savings you'll need to build up, incorporating factors such as inflation and tax rates. The amount you already have saved and the rate you plan to contribute to savings can be factored in.

4. Plan a budget and savings strategy. One of the best ways to plan for retirement is to eliminate your debt. It's very helpful to analyze your budget by writing down everything you spend money on to see where your money goes and what it adds up to. This can help you figure out ways to eliminate or reduce unnecessary expenses. One suggestion for saving money is to automatically deduct a certain amount or percentage of income so it never reaches your wallet. This can be done by setting up a 401K plan at work or opening a savings account with direct deposit. If you have other income, you can divert a lump sum or percentage to a retirement account each month. You may wish to meet with a recommended professional financial planner.

5. Investing wisely. Depending on your situation, your comfort level with taking risks will vary, so you need to determine what your goal for a yield on investments is. This will be a factor in determining the amount of retirement income you'll need. You will want to plan to have at least a portion of your retirement benefits invested to put your money to work for you. Fixed income investments like an IRA or bonds are more suitable for a conservative investor who's closer to or in retirement, whereas stocks and equity investing involve higher risk and may return a higher yield.

The sooner you get started on retirement planning, the better. While there are no guarantees in life, we must hope for the best and assume we will live long enough to enjoy the fruits of our labor. Therefore, it's better to be safe than sorry, and a retirement nest egg is an essential need for us all.



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