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.