Getting Started with Retirement Planning

Retirement planning isn’t something that you’ll want to put off thinking about for too long – that is unless you plan on living in a shoestring budget in a cramped little apartment.But living the last years of your life scrimping and saving doesn’t sound very appealing to me, and I’m sure that you’ll agree that it doesn’t sound very good to you either.

How to Start Retirement Planning

The first place you should look is setting up your 401k plan.Ask your current employer if there is a company sponsored plan.

For some lucky people your employer may have a matching 401k contribution program which means that for every dollar you put towards your retirement, your employer will also put a fraction of that amount towards your retirement.This is basically FREE money from your employer over and above your salary, and it’s amazing how many people don’t take full advantage of this.Find out what your 401k situation is, and even if you already have one up and running it might be worth your time to talk to someone about what kind of 401k program you have available to you.

Your other main option is an IRA or Individual Retirement Account if you don’t have a 401k available to you.
There are a few key differences between a 401k and an IRA that you should be aware of:

  • Retirement PlanningThe 401k is company sponsored, so if your employer doesn’t offer one, then you are out of luck.
  • The 401k generally allows for more money to be contributed to it each year
  • IRAs have a lot wider selection of investments available to you.

Can You Have a 401k and an IRA at the Same Time?

If you’re in a situation where you can fund both your 401k and IRA it is possible to contribute money to both accounts during the same year so you can get maximum benefit from your money today for your retirement down the road.The unfortunate part about contributing to both accounts is that it can get a little confusing and the contribution rules and rates can change from year to year, so it’s in your interest to hire a competent accountant to make sure that you’re moving towards your retirement planning goals without some of the headaches that you might otherwise suffer from if you try to tackle this on your own.

Retirement Goals

Defining your Retirement Goals

This is really the big question that you need to spend some time thinking about, and while there are all kinds of fancy calculators out there everyone’s situation will be different and what’s important to you might be completely different from the ‘average’ person, so it’s best to take some time to think about your personal situation before you get pigeonholed into what the ‘average’ person may want or need during retirement.
This site is all about retiring overseas, so I would hardly consider this a ‘normal’ situation.

That said, here are some of the most common things that you should consider for your retirement planning.

  • Where do you Plan to Live? Cheaper locations will mean that you have more money to spend on other things like travel, spoiling the grandkids, entertaining with friends etc
  • What are you Medical Expenses? This one will vary widely, but if you have any medical expenses now, best to factor them in, and depending on your personal situation assisted living may be another thing to consider and budget for in the future.
  • What are you Housing Expenses? Do you own your own home, or rent – there’s advantages and disadvantages to each that will impact your retirement.
  • What are you living expenses? This ties into the first three items listed above, but also includes things like budgeting for travel, food, utilities etc.

Once you have a good idea on what it’s going to cost you to live per year, then it would be a good idea to budget for an extra 10-30% additional money needed so that you have a buffer for unforeseen expenses. I personally always take the cautious route and try and have as much buffer as possible.The extra saving that you are able to do today to fund that buffer could make all the difference in the world down the road, and it’s not like you are ‘losing’ the money.You’re just deferring the spending until a little later, and that’s always a good idea!

What’s Next for Retirement Planning?

We’ve only just scratched the surface here, and retirement planning is such a huge topic that I’ve tried to break it down as much as possible into the following articles:

Early Retirement Planning – What will it take to retire before the usual 60-65? Get started thinking about your retirement today because if you start thinking abou this soon enough almost anyone can retire early!

Early Retirement Plans Guide – Depending on what age you are considering for your early retirement your plans will need to be quite different. This guide has info for 35, 45 and 55 that will help make your retirement dreams a reality.

Early Retirement Plan – An early retirement plan provides a basic guide for early retirement if someone wanted to retire at 50 instead of 65, and what would a retiree need to do to save enough to retire in America.

A Retire Plan For The Future – This Retire plan provides a simple and easy to follow retirement plan you can do by yourself.

Do You Need a Life Insurance Plan for Retirement? – Having a life insurance plan for retirement is one of the corner stones of any sound financial plan. While imagining our own death is not something that anyone likes to consider, you need to put aside your personal feelings and think about the people that are depending on you.

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