For many individuals, saving for retirement is a somewhat unusual concept. On the one hand, the general concept of saving for retirement is easy to understand – you’ll need a lot of money to live off of once you stop working, so you need to be sure to save throughout your working years in order to accumulate enough money.
On the other hand, knowing how much is “enough” and the best path to get there can be quite difficult to figure out. There is no one-size-fits-all approach that will work for everyone, so the way to find the best solution for you is to ask a few key questions that will help you decide how to move forward.
Here is some retirement advice that can guide you on this.
1. How Much Have You Saved Already? The first question to ask yourself is how much you have saved for retirement right now. Don’t rely on your memory or just estimate how much you think you have in your various retirement savings accounts. Review your account statements and come up with the exact numbers. If you have other assets that you consider to be for retirement purposes (such as a separate investment account), then include those amounts as well.
2. When Do You Plan to Retire? Next, come up with a target year in which you hope to retire. Don’t automatically assume that you want to retire at the earliest possible date. Many individuals who enjoy or are otherwise fulfilled by their jobs or careers seek to continue working even after they pass customary retirement ages.
3. How Much Can You Expect From Social Security and Defined Benefit Plans? Once you have a general plan for your retirement timeframe, estimate how much you expect to receive in Social Security benefits once you reach your retirement age. If your target retirement age is less than 70, be aware that by delaying your election of Social Security benefits you’ll be able to receive larger monthly benefit checks for as long as you live. Similarly, if you have any work pensions or similar defined benefit plans, determine your expected monthly benefit.
4. How is Your Spouse’s Financial Health? If you’re married, be sure to conduct this retirement savings analysis together. Even though accounts such as IRAs and 401(k)s are individual accounts, all of your retirement-related financial decisions should be made jointly. If your spouse’s financial health is less than ideal, what steps can you take now to help improve it so that your overall retirement as the couple will benefit?
5. What Type of Retirement Lifestyle Do You Want? Finally, after you’ve asked yourself the questions above, and have a current and realistic snapshot of your financial health, you can begin thinking about what type of retirement lifestyle he planned to choose one. Unfortunately, many people assume that they’ll be able to lead a particular lifestyle without giving any thought to whether it’s realistic, or whether they’re doing everything they can to make that goal become a reality.
The answers to these questions may sometimes be uncomfortable, but the best way to give yourself a good chance of reaching your retirement goals is to have all the information you need to make the right decisions.
Tags: retirement advice, retirement planning, retirement savings, social security
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For many individuals, saving for retirement is a somewhat unusual concept. On the one hand, the general concept of saving for retirement is easy to understand – you’ll need a lot of money to live off of once you stop working, so you need to be sure to save throughout your working years in order to accumulate enough money.
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