It’s never too early to start planning for and understanding how you will retire comfortably. We’ve all heard the advice, “The sooner you start saving, the better.” It is true. In fact, too many put off saving for retirement only to end up in financial ruin when they should be enjoying everything they worked hard for in life.
Tips to set yourself up for retirement:
Hire a financial planner. Some will take a portion of your investment gains as their fee, others will charge you a flat rate.
Start today. A 22-year old earning $40k who starts putting 10% into a 401(k) with a 3% employer match could have $1.7 million at age 65. If you wait 10 years to begin investing, you’ll have roughly $780,000.
You need more. Social Security won’t be enough. At this stage, the Social Security benefits will not be guaranteed for Generation Y, or even Generation X. Be wise and take charge of your retirement.
Contribute to your 401(k). The money you put in now is tax-free. You’ll pay taxes when you withdraw the money.
Research an IRA (individual retirement account). There are a few options: a Roth IRA and a traditional IRA.
Know the limits. There are limits based on age on what you can contribute to a 401(k) and an IRA.
Do all the things. You can contribute to a 401(k) and an IRA to take advantage of allowable contributions.
Know all about 401(k). Contributions can reduce your taxable income. 401(k) plans do not have income limits.
Close to Retirement
But what about when you are approaching retirement?
When you are approaching retirement, creating a budget is important. Here is what you need to consider:
What is your approximate monthly income in retirement and where will your money be coming from?
IRA or other retirement accounts
Outline your expected spending including housing and utilities, groceries, insurance, debt, family care, medicare premiums, cell phone bill, and leisure activities.
Will you relocate?
How will your clothing budget change now that you no longer need professional clothing?
Would you play more golf now that you have free time?
Will you travel more?
Will you need to purchase a new car in retirement?
Life changes can be scary, but planning ahead, and entering the change with a strategy can put you on the path to financial success in retirement. If you need help with your finances or estate planning, we can help. Let’s talk, click here to schedule your free, no-obligation appointment or text AskRon to 21000.