The average retiree in America will live 20 years after they retire. Many experts believe that you will need a monthly income equal to 70 percent of your current take-home pay. It is never too early or too late to begin saving money for your retirement years. Keep in mind that today’s dollar will be worth a lot less when you retire, so you might want to get an inflation estimate chart and determine how much money you will need. For example, assuming inflation is 3% annually over the next 20 years one dollar will be worth 60 cents in today’s purchasing power. This will give you an idea about the funds you will need if you plan to retire in 20 years. Charts are available on the internet to help you make other calculations. Here is a list of 10 ways to prepare for retirement:
#1: Start A Savings Plan and Stick To It
Develop a plan that will enable you to save the amount of money you will need by the time you retire. Obviously, this may be difficult at first, but continue to strive toward your goal.
#2: Determine Your Retirement Income Requirement
Keep in mind any unusual medical expenses you may have and any travel plans you might want to make. Try to anticipate your lifestyle expenses as best you can.
#3: Contribute To Your Employer’s Retirement Plan
If your employer offers a retirement savings plan, then sign up and contribute all you can. You will not pay income taxes on the money you contribute. Therefore, your money will grow faster.
#4: Study Your Employer Provided Pension Plan
If your employer provides such a plan, then learn all you can about it and determine how its benefits will fit into your overall goal.
#5: Start Your Own Individual Retirement Account
You can contribute up to $5,500 a year into an IRA, and you can contribute even more if you are over 50. You may receive favorable tax treatment depending on the type of plan you choose.
#6: Find Out what Your Social Security Benefits Will Be
You can use an online estimator provided by the Social Security Administration’s website to estimate your benefits.
#7: Consider Investment Strategies
It is important to save, and it is more important to invest some or even all of your savings in secure investments. Don’t hesitate to seek professional advice.
#8: Don’t Touch Your Retirement Savings
Avoid the temptation to withdraw money from your retirement savings. You will lose more in the long term than you withdrew.
#9: Consider The Magic Of Compounding
If you invested $5,000 a year at 7% annually, you would have $316,245 in 25 years. You can do even better with the right investment advice.
#10: Find A Financial Adviser
You will be much farther ahead if you don’t try to plan for your retirement all by yourself. Seek professional help and don’t hesitate to ask questions.