HOW TO PLAN FOR RETIREMENT
Retirement planning – everyone loves the idea of retiring after a certain age and enjoy reaping the benefits of lifelong services.
However, with increasing medical bills and burdening expenses, retirement is no longer a luxury than we can imagine.
As social security benefits are thinning, it is time to step up and act.
Start saving from your youth to build a healthy retirement plan.
Here are a few steps to your retirement planning.
Planning Your Retirement
A. Envision the age when you will retire.
It can significantly impact your retirement planning.
You can retire at the age of 62 or earlier.
However, you will not receive any benefits until you are 62.
Retiring earlier decreases your benefits depending on how close your age is to 62.
B. Take note of your family history and lifestyle choices and estimate your life expectancy.
An average male lives around 84, while women can live until 87.
This will help you to calculate how many years you will live past retirement and make plans accordingly.
C. Estimate your retirement length and post-retirement expenses.
Every person has around 20 years to live after retirement.
The standard rule is to multiply your annual income from before retirement by 70 percent to get retirement expenses.
However, this percentage also varies depending on post-retirement plans.
Figuring Out How Much You Need to Save for your Retirement Planning
A. Find out how much you will earn from pensions and annuities.
You may receive post-retirement income from company pensions or annuities that you have purchased.
Calculate your total income from these sources and subtract it
from total expenditure after retirement.
This will give you an idea of how much to save.
B. Add in the various sources of income you will receive after retirement.
Determine if you have any sources of passive income like rental properties,
royalties, dividend securities, and business investments.
Saving for your Retirement Planning
A. Earn faster with compound interest than simple interest.
It is widely used in banks and retirement accounts and can greatly boost your capital.
B. Search online for a compound interest calculator and input a reasonable interest
rate and the number of years you have until retirement.
Accordingly, you can set the initial deposit and monthly contributions until you reach your goal.
C. Based on your required monthly savings, create a budget savings plan.
If you can’t afford the entire amount now, set aside whatever you can until retirement.
The important thing is to adhere to the savings plan all the way long until you retire.
D. Don’t touch your retirement fund until you retire.
It may be tempting, but remember the more you withdraw,
the more your amount of interest reduces and the lesser you earn.
Retirement is always inevitable, and it will turn a new leaf in your life.
It will bring new possibilities in different aspects and also you may learn new things about yourself.
Prepare yourself for that phase, plan ahead, so that you
can enjoy it hassle-free. When it comes, embrace the new you.