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How to Plan for Retirement

how to plan for retirement - A secure, comfortable retirement is every worker's dream. But the complexity and time required in building a successful retirement plan can make the whole process seem nothing short of daunting. But planning a comfortable retirement requires only sensible planning towards an attainable savings and investment plan, and a long-term commitment to reach the goal. Even once it is reached, managing your retirement is an ongoing responsibility that carries well into one's golden years.

Retirement Planning Guidelines

Following the easy steps given below you can effectively plan your retirement and enjoy your golden years comfortably.

1. Evaluate your net worth: The first step towards retirement planning is to evaluate your net worth?A realistic evaluation of what you own and what you owe is vital to take care of your financial needs during your retirement years.

A. Calculate your assets: Your assets mean all that you own - your Regular IRA and Roth IRA? Calculate the value of your 401(k) or 403(b) workplace retirement plans. If you were self-employed, did you create any self-employment retirement account like SEP-IRA or Traditional IRA? Also evaluate your other assets like annuities or life insurance policies. This will give you real picture of your assets which is what you actually own. You may also have other assets such as your personal properties like house, car, investments etc.

B. Calculate your Liabilities: Equally, if not more, important part of retirement planning is assessment of your liabilities. Most of us reach retirement date with some unsettled debts like home mortgage, car loans or credit card debt.

Assess all your assets and debts and then work out your net worth when you actually retire from active working life.

2. Retirement Calculation: This step is perhaps the most vital and crucial step wherein you need to know how much you will require to spend your retirement comfortably, how much you need to save now, from where can you save, how to set up a retirement account, how to manage your retirement account etc.

Given below are some easy steps for Retirement calculation:

2.1 Start Saving: First step is start saving. The only way to create wealth is to save. Only by saving will you have money in the bank or otherwise invested. By the time retirement rolls around, the dollars you save today may have grown many times over. The key is to begin and to begin soon. Each year you wait can be costly, so make sure to save enough.

2.2 How to Save money: Saving for retirement requires only three easy steps- Choose a retirement account, Open a retirement account, and Put money in your retirement account. Choose a retirement account: You have many account options for retirement savings such as regular IRA, Roth IRA (except for high earners), 401(k)(for profit employers), 403(b)(for non profit employers), 457(for state workers) plan. If you're self-employed, you'll have a slew of additional self-employed retirement plan accounts to choose from, including a SEP-IRA, a SIMPLE IRA, and a Keogh plan. Open a retirement account: Opening a retirement account is almost as easy as opening a bank account. Just fill out some forms and you're on your way. All you require to fill in some basic information like your name, address, and other contact information,social security number, estimate of your net worth and annual income, beneficiary's name, address, and social security number. Put money in your retirement account: Next step is to actually put the money in your account. In the case of an IRA, this can be done by writing a check or setting up an automatic transfer into your retirement account. Make the check out to the name of your custodian, for the benefit of your IRA.

3. Retirement Investing: After you've "funded your retirement account." the fourth and final step is to determine how to invest the money you have saved. You have many retirement plan investing options available. You can invest your money in either shares, bonds, mutual funds, REITs, etc. You can also take the advice from a Financial Planner or an investment manager who can better guide you on where to invest your money if you think you do not possess required technical and financial expertise. A financial Planner can either be a Chartered accountant(CA), Broker, Chartered Financial Counselor (CH FC), CIC, CLU etc. You should consult your peers and research extensively about the authenticity and expertise of the person before hiring him/her as your Financial Planner.

After following all the above steps all you need to do is to sit and relax comfortably and enjoy your retirement.