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How to Build your Ideal Retirement Plan

In past times, people used to work for all their lives long and they preferred to retire only after accumulating sufficient amount of wealth which they could utilize for their retirement period. But in today’s time, people who have retired still need to remain active during their retirement period as high cost of living may vanish their savings in quick time. There are many strategies available today with the help of which you can build your ideal retirement plan so that you don’t have to face any trouble after retirement.  Go through following list of strategies which will help you to build a successful retirement plan –

Recognize your Retirement Needs

Retirement is one of the expensive things you may have to deal with in your life time. Financial experts recommend that you will need more than seventy-five percent of your retirement income to maintain same standard of living when you get retire. So it is always advisable to recognize your retirement needs in prior time and start accumulating money according to your requirement.

Stick to basic investment principles

In which products you are investing your money is as important as how much money you are saving. Invest your savings in diverse kind of investment products. By diversifying your portfolio, you can manage investment risk and earn stable returns in long term. You must upgrade your portfolio over the time considering various factors such as your goals, age and monthly income.

Don’t withdraw your retirement savings

If you withdraw your entire or partial retirement savings prior to your retirement period then you may lose interest earned on your savings. Besides this, you can’t avail any tax benefits and you may have to bear significant amount of withdrawal penalties. In case, you are planning to switch your job, keep your entire savings invested in your existing retirement plan. You can also think of rolling your investment to your retirement plan of your new employer or to an IRA.

Know more about your employer’s retirement plan

If your employer wishes to cover you under traditional retirement pension plan then understand how the plan exactly works and what benefits are offered under plan. You can ask for individual benefit statement to check whether benefits you are going to avail are worth paying high amount of premium. In case, you are planning to switch your job, check out how it will impact your retirement plan. If your spouse is working as well, then analyze whether you are entitled to receive any retirement benefits under the spouse’s plan.

Keep saving regularly

If you are saving already, whether for the purpose of retirement or some different goal, keep continuing. Saving is highly rewarding habit, which every individual must imbed in himself at right time. You can begin with very small amount and increase some percentage amount every month. The earlier you start saving, more time your money gets to grow. No matter in which stage of life you are, it’s never too late to start contributing for your retirement. If your retirement is far near then there are several tactics you can follow to enhance your retirement savings.

Look for what your employer is trying to match

If you are participating in employer sponsored retirement plan like 403(b) or 401(k) then find out whether your employer is providing you matching contributions. You can increase your contribution to avail complete benefits of employer match. If you are not participating in the plan in which your employer is providing matching contributions then it means that you are not taking complete advantage of your retirement benefits. Generally, employers try to match up six percent of an income of employee.

Consider Roth IRA

If you have availed tax benefits of every option your employer is offering but you have still significant amount of money left in your pocket then invest it in Roth IRA. It is similar to other IRA account in which an individual can add regular amount into the account and divert that amount in mutual fund, bonds or variety of stocks. However, one important thing to note is that all the contributions made to Roth IRA are done after your income is taxed. The money invested in the account appreciates tax free and you don’t have to pay any taxes when you apply for withdrawal of funds.

Map your future

Make a retirement plan considering your financial goals and capabilities to invest. A comprehensive retirement plan can assist you in addressing several issues such as estate planning, succession planning, profit sharing, pension, employee benefits, insurance planning, risk and investments. A nicely designed retirement plan helps an individual to understand how much he has to save outside his employer’s plan in order to enjoy secure retirement life.

Important questions to consider

  • Do you need to make any mortgage payments?
  • Are you planning to work on part time basis to earn an additional income?
  • Will you need more income during retirement than you are earning currently?
  • Would you prefer to opt for travel or vacation? If yes, what are the overall expenses involved?

Get rid of all debt

Control your unnecessary expenses by living frugally. Stick to your ‘needs’ rather than your ‘desires’. Try to pay off your high interest rate credit cards by contributing some amount from your existing savings. You can also reduce your large part of debt by getting in touch with debt relief companies. Don’t put yourself into the situation when you have to utilize your retirement savings in order to clear your debts.

Conclusion

As soon as you enter into your golden age, you can’t wait to achieve things you have always dreamed of. So don’t jump into the dreams without making a proper retirement planning. Try to differentiate the definition of retirement today as compared to decades ago. The downsizing and challenging economic situation of today’s time force many seniors to do part time job or start new business which can help them to meet their daily needs and achieve financial stability. Above discussed strategies will not only act as your retirement planning guide but those will also act as road map to your long term financial success.





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