There Is A Lot More To Know About Retirement Than Most People Realize.
Retirement is expensive, and for the overwhelming majority of us, retirement is absolutely essential. If you want to avoid pulling your hair out over stress during the later stages of your employment, you better learn all that you can now and draw up a plan based on what you learn.
9 Tips To Help You Prepare For Retirement:
- Know Your Retirement Requirements - Experts estimate that you will need about 70% of your preretirement income in order to maintain your standard of living after you retire. For lower earners, up to 90% or more might be required.
- Learn About Social Security Benefits - Social Security only pays, on average, about 40% of preretirement earnings. That means the remaining 30-50% needs to come from money you set aside. To learn more about Social Security benefits, call the Social Security Administration at (800) 772-1213.
- Pension And Profit Sharing Plans - There are all sorts of benefit plans out there: Benefits from previous employment, benefits from a spouse's plan and any benefits currently available to you. Request an individual benefit statement from your employer to learn more, and learn more about protecting your pension by consulting an expert.
- Tax-Sheltered Savings Plans - The most common of these is the 401(k) plan, although there are several other types of tax-sheltered savings plans. The best thing you can do for yourself is to sign up for a 401(k) plan and contribute as much as you can. It can lower your taxes and accumulate more money over time through compound interest and tax deferrals.
- No Plan Where You Work? Ask For One - Not every retirement solution is complex. Simplified employment pensions are available to certain employers. So if your employer does not offer a retirement plan already, suggest that they do and recommend ordering IRS Publication 590 for more information.
- Individual Retirement Accounts (IRAs) - Another smart investment is an Individual Retirement Account, into which you can put up to $4,000 a year and gain tax advantages. There are two types of IRA - the traditional IRA and the newer Roth IRA. What separates the two is the treatment of your contributions and withdrawals. Also, the after-tax value of a withdrawal differs based on the type of IRA selected.
- Resist Tapping Into Savings - Dipping into your retirement savings is a big no-no. Doing so will result in loss of principal and interest, and could possibly even compromise your tax benefits. When changing jobs, immediately move savings directly into an IRA or a new retirement plan.
- Get Started Sooner, Not Later - There is no right or wrong time to start saving. The best time is now - to get a jump on things. The sooner you start putting away for retirement, the more time that money has to grow.
- Do Not Hesitate To Ask Questions - These tips are only designed to provide casual insight into retirement planning. You should use this e-tip as a springboard to conduct more extensive research on your own. Pose questions to anyone who might know something about this subject - your employer, your union, your bank, your financial advisor, etc. Get some advice, get a plan, then get started.
Summary: Proper preparation for retirement calls for more than just signing up for a 401(k) and shoveling money into it regularly. If you want to come out on top when you retire, you need to realize that retirement is expensive. Develop a plan, set goals and stick to it. If you learn the system inside and out and get a jump start on your savings you will be retiring in style when the time comes.
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