Keep Your Retirement Life Happy– Retirement planning And Tips
Create a Budget
To help preserve as much of your money as possible and maintain the lifestyle you want, you need to begin with a plan and create a budget. First start by determining your net worth. The total value of your assets minus your total debts. Including the value of your house minus the how much you still owe on your mortgage. Once you know your net worth, determine how much you’ll need to contribute to savings to reach your retirement goal. Your retirement fund goal should annually deliver between 70 to 90 percent of your pretax, pre-retirement salary.
You should designate an amount of your pretax income to contribute to your retirement savings.
Create a budget you can adhere to for retirement savings. After a few years of creating new budgets your net worth will grow more and more positive. You should plan to live your retirement years the way you like. So create a budget that will let you outlive your retirement savings.
Take advantage of retirement plans at your place of work
This is a must do, especially when employers offer contribution matching programs. Under these programs, not contributing is like refusing free money.
There are a number of types of retirement savings account plans that employers can offer. Among the most popular are the 401(k) plan and the IRA (individual retirement account). They both have advantages and disadvantages and are available at most mid-sized to large companies.
There are debates over which is better– a Roth IRA, where savings are taxed when they are contributed or a 401(k), where contributions aren’t taxed until they’re removed or until the account matures.
Both have unique features. The 401(k)’s interest income is allowed to accrue over a lifetime and taxable at upon maturity.
Roth IRAs are also worth considering. While paying taxes up front, you might find you’ll lose less money in the long run.
Those who work at small businesses have options as well, as do the self-employed. Check with your employer. You might also consider contributing to more than one account at your local bank or credit union. Diversification is an essential ingredient to saving for retirement.
Diversification of your portfolio is best protection of your retirement savings. Don’t put all of your eggs in one basket. The more diverse a portfolio, the safer it is. Invest not only in stocks and bonds for your portfolio, look for other ways to spread risk among your investments. Invest in different sectors, like pharmaceuticals, banking, mining and metals, technology, telecommunications, biotech, etc., etc. You should also consider investing in economies throughout the world.
Using any extra money that formerly went to monthly expense of your mortgage payment, can then go towards your retirement savings contributions. Ultimately, the best thing you can do with your mortgage is to pay it off by the time retirement rolls around. By doing so you will have instant and substantial increase in income.
It’s a good idea to avoid paying investment fees whenever possible.
It difficult to avoid all fees with a retirement account. Shop around, some advisors charge fewer fees than others. Familiarizing yourself with fees before using a financial adviser. Part of what you’re paying for is expertise.
Keep working until retirement
We are leading healthier and more active lives, which means we are also working longer. This will give your portfolio the chance to continue increasing in value for more years. The more time that your retirement investments have to accumulate, the more exponential will be its growth rate through the power of compound interest.
As you near retirement age there are options available. Keep working the same hours or you can also undertake a step-down method, either by decreasing your working hours or by finding another, less demanding job. Having paid off your mortgage and other expenses, and being willing to live a little frugally for a few years, works well while you’re gradually decreasing your work load. Trading work time for free time can be a great trade off.
Create a budget you can adhere to for your retirement savings. After a few years your net worth will grow more and more. This is not to say that you have to look forward to living frugally the rest of your life, just wisely. What is it you’ve always envisioned yourself doing when you retire? If it’s travel, then create a travel allowance in your retirement budget. If it’s spending time with your family, then create a “spoil the grandkids” category.
You can still live your retirement years the way you like and sticking to a budget will help you to live within your means.
It’s a good idea to purchase long-term care insurance. This specialized form of insurance covers the cost of health care that extends long beyond a typical hospital stay.
With long-term care insurance, you are buying insurance that protects your retirement savings. Having to spend your hard earned savings on long-term care, which can reach into the tens and even hundreds of thousands of dollars depending on the quality and length of care – is not what your retirement savings were meant for.
At retirement age and without any children to take care of, consider a smaller home. Or living in a retirement community also called an active-adult community. These communities are planned with amenities to meet the needs of senior citizens. Their amenities may include arts and crafts classes, entertainment, nature trails, golf courses, swimming pool and even on-site medical facilities.
A car is usually the next major expense. Does your car fit your needs as a retiree? A smaller, more fuel-efficient car could save you a lot of money.
Continue working part time
There are some benefits to working part time after retirement. Earning money and strengthening your financial situation a good thing especially if your pension is just enough to get by on. Many people are finding that their savings are not enough in changing economic times. Or you can use the extra money for an extended vacation, home improvements or to help family members.
Having a part time job and interacting with people on a daily basis can help maintain better physical, emotional and mental health. In many companies, transitioning to part-time is an option for people in their retirement years.
A person nearing retirement age has a few options available. One is to simply stay at the same workplace. You can also undertake a step-down method either by decreasing the hours logged at work or by finding another less demanding job. The downside to the step-down method is that it will likely result in less income. Having paid off your mortgage and other substantial expenses, and being willing to live a little frugal for a few years, works well while you’re gradually decreasing your work load.
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How to save for retirement in 2014
Lower fees and increased matching in retirement accounts are just a few of the better benefits you can look for in 2014.