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We all look forward to the time in life when we aren't working anymore. If planning for that time feels overwhelming, no need to worry! Having a retirement plan in place actually reduces that stress and is more easily achieved than you may think. Understanding the differences in options when it comes to investments and savings accounts, as well as the requirements in the state where you live, are vital components of the retirement planning process. Below, you'll learn when to start retirement planning, how to determine the best investment options for your needs, and why it's important to rely on the help of a retirement planning professional.
Learning the best ways to save for retirement can feel overwhelming. Between 401ks and the various types of IRA accounts, there's a ton of information to sift through in determining the right options to suit your needs. Working with a qualified retirement advisor is the best way to determine what accounts will help you grow your wealth in a way that makes sense for you. Furthermore, your retirement planning advisor can help you set and prioritize your savings goals and create a step-by-step plan to get your finances where they need to be when you're ready to stop working.
It's never too early to start planning for retirement. By setting aside money every month as soon as you begin your career, you'll have a considerable nest egg that can help you continue enjoying the same lifestyle that you do throughout your lifetime, even after you've retired. For example, saving $100 per month from the age of 20 to the age of 67 could result in a savings of $160,000, provided you gain a 4% return on your investment. By saving $500 per month, that same investment could lead to an investment savings of $800,000. The amount you decide to save per month then depends on when you plan to retire, as well as your current age. Furthermore, it depends on the income you're typically used to. It goes without saying that this calculation is best discussed with a professional retirement advisor; however, you can get a general goal of what you'll need to save by determining your annual expenses and multiplying that number by 25. You can also follow this guideline to get you started:
• Save 10% to 15% of your paychecks if you start to save in your 20s• Save 15% to 25% of your paychecks if you start saving in your 30s• Save 25% to 35% of your paychecks if you start saving in your early 40s• Save a minimum of 35% of your paychecks if you start saving in your mid-40s or later
Knowing where and how to stash your retirement savings is an important part of your retirement preparation. If you have a 401(k) or another employer-sponsored account, it's important to make contributions to it that allow you to receive any match bonuses from your company.
You can also consider a traditional or Roth IRA if you've maxed out your 401(k), or a brokerage account to grow your investments beyond what an employer-sponsored account and an IRA can offer.
The most important step in starting your retirement plan is to decide when you want to retire. You should next determine your spending needs and schedule an appointment with a retirement advisor to discuss your plans.
It's never too soon to start putting money aside for retirement. Work with a qualified advisor to discuss your retirement plans and start saving now.
Five years before you retire is the best time to bump up your investments and ensure you've got enough funds to stop working. Make a point of re-estimating how much money you'll need to retire at this time and work with your advisor to evaluate your state's tax requirements, diversify your investments and save as much cash as possible.
Jim Degenhardt discusses the benefits of taking control of your 401K investment strategy.
For many of us, our 401(k) plan is our only savings for retirement, which is why it is important that you utilize the investments that fit your needs inside the plan. If you are not comfortable with your 401(k) options, we can provide the advice and monitoring that many 401(k) plans lack. Please contact us today and let us help you understand your 401(k)/retirement plan.
A professional retirement advisor can ensure you're fully prepared for retirement so that you're able to live comfortably and maintain a high quality of life. Contact Flaharty Asset Management to schedule an appointment with one of our trusted retirement planning advisors today.