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Retirement Planning: How, When, and Why

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Retirement Planning: How, When, and Why


Retirement can be an exciting time when you get to explore lots of new interests and activities. Retirement planning is how you make sure you have enough income for all the adventures ahead!  

Have you thought about how and when you’ll retire? Are you aware of the basic realities that face everyone as they near retirement age? These are important questions to ask yourself. If you haven’t given your retirement plans a thought, it might be time to start. It could mean the difference between living the retirement lifestyle you dream of, and the one you hope to avoid. Here’s a primer to get you started. 

Retirement Planning 

People generally imagine investment portfolios when they hear the term ‘retirement planning.’ That may explain why they’re so reluctant to delve in and get started on their own plans. They feel they don’t have the money to invest or the stock market is just too overwhelming.  

That’s rarely the case, however, as any financial planner would tell you. It’s probably worth at least holding a preliminary meeting with an expert. But also consider that there’s another side of retirement planning that’s just as crucial to the financial planning you need to do: ‘personal planning.’  

To live your dream retirement life, you’ll need to think about how you’d like to spend your time when you retire… and where. These choices are just as important as the financial choices you’ll make, and together, they form the two components of retirement planning.  

So, Why Do It? Why is Retirement Planning Important? 

Your retirement will be a lot more comfortable (and enjoyable) if you have the means to support yourself. When your income matches your expectations, you get to make the kind of lifestyle choices that end up making you feel happier and more fulfilled.  

It’s also good to start as early on as possible, while you’re still drawing a salary. It gives you time to accumulate funds and allow them to grow in a well-managed account that’s set up to suit your needs as you age. 

Retirement Planning: the ‘How’ 

Will you have enough money? What if you want to travel? Maybe you’ll even want to start your own business! To reach your goals and maximize all your opportunities, follow these guidelines for how to plan for retirement. Then, you might consider visiting a retirement planner. They can formulate a customized plan based on the “research” you’ve done.

Here are some things to consider: 

  • Will you relocate? Do you plan on downsizing? 
  • Have you looked into independent living communities? 
  • Do you know how the financial structures of independent living and assisted living work? 
  • Have you taken into account the taxes you’ll pay after retirement? 
  • Have you thought about capital gains? 
  • There are different types of savings vehicles to choose from: do you know them all? 
  • Have you tried projecting your spending levels in retirement, for planning purposes? 
  • Can you project how much your accumulated assets will be worth once you retire? 

Once you’ve answered these questions, a financial planner can help you get perspective on your savings. The amount you save each month may have to be adjusted (that will continue to be the case as you get closer to retirement).  

Starting to think about retirement savings? Read this article to learn what you need to retire comfortably.   

Retirement Planning: the ‘When’ 

Paving the path to financial security is different with each decade that passes. For example: 

  • In your 40’s. If you’re in your 40’s, you might focus on prioritizing your savings goals. Maximize your 401(k) if you have one. Or start an Individual Retirement Account (IRA), for example. In your 40’s, you may be in the prime of your career with a top income, but you may also have several types of financial obligations. Retirement planning might not be at the top of your list of priorities, but it’s often wise to consider starting sooner rather than later. 
  • In your 50’s. In your 50’s, things change a bit because you can start contributing more to an IRA account. You may also defer taxes on more funds that go into a 401(k) account. Once you reach 59 1/2, you can start taking money out of your 401(k) and IRA accounts without a penalty for early withdrawal. 
  • In your 60’s. Folks who are in their 60’s might be advised to start thinking about what type of lifestyle choices they’ll make once they retire. They’ll also want to begin thinking about whether they’ll have enough to retire. 
  • 65 and beyond. One common myth is that once you’ve retired there’s no more planning to be done. But that’s misguided. Folks who’ve already retired still need to think about retirement planning! If you’re 65 or older, it’s all about managing your money and making sure it lasts. Markets fluctuate, tax laws change, and you may face an unexpected bend in the road when it comes to health, family, or other uncontrollable events.

As you transition from saving to planning to managing your money, it’s always a good idea to periodically reevaluate your choices. Life isn’t always predictable and sometimes major life events can have a financial impact.  

Something else you should consider? Downsizing. This is a crucial part of most retirement plans. Read this article for 5 tips on how to stay sane when downsizing your home for retirement. 

Conclusion 

You deserve to retire to a fulfilling, exciting lifestyle. Start planning now and you’ll be more prepared to reach your goals and see your dreams come true. From the personal choices you make to the financial structures you build to fund your dreams, it’s all about living the retirement you want to live. And remember: it’s never too late to get started! 

Want to learn more? Read this article detailing financial planning advice for seniors. Learn the best way to plan for your future and what expenses you should be most concerned about.  

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