Christy |
3:27 PM |
Financial security just doesn't come with old age. You need to make
a plan early to help you save and start thinking about the future. In
order to remain comfortable after retirement, many people start saving
early, but they don't realize how much they actually need to survive
without any income. According to the United States Department of Labor,
less than half of Americans don't calculate the right amount for what
they need after retirement. In addition, workers don't often participate
in 401K plans, but on average, people remain in retirement for 20 years.
Saving for a rainy day is one thing, but when you are planning the rest
of your life, you need to consider a few things and begin planning immediately.
1. Create Goals and Start Saving
If you have already been saving, you're ahead of the game. You should
never stop saving, however. Saving is a great habit to start early on
in life, but retirement savings should be separate from vacations and
college education. As you start saving, your money begins to
grow, and for some, that creates a need to spend, which places a strain
on the retirement fund that you worked so hard to achieve. The first
step is to write a concrete plan for how to save that includes your
goals and expenditures for 20 years. It's never too early to start saving.
When creating this plan, consider what your finances are now. If you
have debt, you should find a credit repair expert to help consolidate
debt and lessen the financial strain to make it easier to save. Most
financial analysts predict that people need at least 60 to 70 percent
of
preretirement income if they earn above $70,000
a year. For those who have low earning potential, it's at least 90 percent.
These numbers are there to help you plan what life will be like when
you stop working. You should consider all of your bills and look at
both monthly costs of living as well as annual costs. In addition, if
you plan to travel during retirement or want to make bigger purchases,
your savings plan should include how to set aside funds for those expenditures
as well.
3. Join Your Employer's Savings Plan
Most employers offer a 401K or retirement plan. You can help yourself
by specifying a certain amount that you want saved. Employers usually
kick in a $1 or more per what you add to the pot. This allows
you to make automatic deposits into your retirement fund. You also earn
more money based on interest and taxes, so your retirement plan can
really add up in the end. Most retirement plans require that employees
remain with the company for a certain period of time before joining
a 401k.
If you already have money in the stock market or other types of investments,
you may be a little knowledgeable about how to diversify your money
so that you are constantly earning. However, you should also
consider safer stock market buys and finding ways to increase your investments
so you have more financial security.
5. Social Security Benefits
Not everyone is eligible for social security benefits. You need to
have held a job for many years and earned social security on
your income. Most social security pay is equal to about 40 percent of
what you earned before retirement. You can figure out the exact sum
through the Social Security Administration webpage.
When you retire, your family's lifestyle will change as well.
You should include your spouse in any retirement decision and inform
your children as well. If you are starting a retirement plan early,
talk to your family about what they can contribute such as an inheritance
to ensure that you have all the accurate figures when creating a retirement
plan.
Once you've begun a retirement savings plan, commit to your goals
and don't touch your savings. It's important to always look towards
the future and remember how you want to live those 20 years.
If you create a stable plan, you can actually live better in retirement
than in any other time of your life.
