Planning For Retirement - A Brief Guide

While planning for retirement should start as soon as you begin to work, few young people take it as seriously as they should. It is far easier to reach your desired retirement income level over 30 or 40 years. Begin your planning for retirement in your early 20's and you could well have serious wealth available to you in your later years. However, if you are reaching your 50's or 60's and discover that you have little or nothing saved for your retirement then there is no reason for you to start panicking. Certainly by being very creative with your retirement planning you can soon make sure that you have enough money (income) when you actually reach do retirement age.

The first thing you will need to look at is to think about when it is you would like to retire. You then need to calculate for how many years after that you want to ensure that you have sufficient income to provide for all your retirement needs. A great way of working out how long you are expected to live is through the use of a life expectancy calculator. There are lots of sites which offer you the chance to use such a calculator for free. Yes, it might be touch upsetting to think of things this way, but it will help give you a reasonable perspective in planning for retirement.

Once you have calculated just how many years you are likely to need a retirement income for, you then need to determine just how much money you will have to put aside for your retirement in order for you to live comfortably. Generally most people will estimate that they need to have around 75 to 80% of what their income is currently while they are working in order to lead a reasonably comfortable life once they have retired.

Now that you have this figure in mind, you need to start tracking what you are actually spending your money on at present and in which areas you can make cuts. Certainly not everyone must have the latest cell phone with all the latest gadgetry. Perhaps, you can make do with just the most basic model out there. The idea here is reduce as much non-essential spending as possible. If you honestly and carefully track ALL your spending, you may be amazed by the realization of how much money goes to non-essentials. Now, any savings that you are able to make you should then immediately start placing in a savings account. Remember the more money you are able to place into this account then the more interest it will earn for you. A benefit, in some places and under some conditions, is that the interest you earn on your savings accounts may be tax free.

Also when it comes to getting into your planning for retirement, look at other areas where you can make savings also. Take every bill, every recurring expense and see if any of them can be eliminated, if any items included on them are not required or are no longer really needed and get them removed. An additional factor to look into is consumer debt. If you have credit card debt, can you pay it off immediately? Or perhaps you could reduce it faster by moving it to a new lower or even zero interest card? A critically important part of retirement planning is not only setting up a highly detailed budget but also making sure that all expenditures are tracked. This process will not only help you save for retirement but will help you prepare for the time when you have to live on your retirement income only.
Fri, Nov 21, 2008 07:22


Bookmark the Site Now!