Geek Wealth
It’s the end of 2022, and as one year draws to a close and another looms, it’s time to start making some critical decisions. Sure, 80% of New Year’s resolutions don’t last beyond February, but some promises are essential to keep.
Take retirement planning, for example. When you’re young and thriving, it’s hard to pay much attention to advice and articles telling you to start planning as soon as possible. But, as a study by the Employee Benefit Research Institute concluded, more than 70% of retirees wish they had started planning and saving as soon as possible.
So when should you start planning for your retirement? It is essential to start the process as early as possible. Start saving regularly, even in small amounts, rather than deferring until you can invest larger amounts all at once. That said, if you’ve been dithering about planning for retirement and need to learn how to start the process, it’s best to start with the basics.
What does mean
does retirement planning involve?
Simply put, it’s the process of planning your finances for retirement from the workforce. It could be a planned retirement that you intend to take when you reach a certain age. Or it may be unforeseen, as a result of sudden personal illnesses or family responsibilities that prevent you from continuing to work. Either way, it’s essential to consider all the undesirable factors and elements when planning your retirement. There are usually six important steps:
When are you going to retire? When will you start planning for your retirement? What are your priorities ? Choosing the account, choosing the investments you are going to make… all these steps require research, careful calculations, a lot of time and planning. So, if you are not sure that you can manage it yourself, you can always get help from financial experts.
Plan when you are going to retire
This is the most important step when it comes to planning your retirement. Planning for your retirement is essential as it will determine the benefits you will be entitled to. For example, if you were born after 1960, you will reach retirement age at 67. This is when you will be eligible for full social security benefits. Claim it sooner and you’ll have to give up some of those perks. Do it later, and the benefits will continue to grow.
Be sure to consider emergencies and malicious items here. Even if you plan to retire after turning 70, family obligations, personal emergencies or illness may leave you with little choice but to “hit the game” sooner. In this case, it would be essential to build up an emergency fund to help compensate for the loss of benefits and income.
Have a good understanding of when to plan
It is essential to start planning for retirement as early as possible. There is no other moment than the present. The best time to start the process is in your early twenties, but even if you’re older and haven’t saved a penny yet, don’t worry. As long as you save regularly and make smart investments, you should be able to catch up quickly.
Know how big your fund should be
This part requires a bit of math and a lot of thinking. How much money will you need after you retire? Financial advisors usually ask you to aim for savings funds that cover around 70-90% of your pre-retirement income. But this number can vary depending on whether you need to set aside money for overseas vacations, family commitments, etc. It’s also important to set aside money for major health emergencies. Again, consider all your personal and unique needs and desires so you can find a comfortable number here.
Planning Priorities
Regular expenses are part of the fund you will need to save. There are, of course, other things you need to plan for as well. Some people have student loans that they may need to repay. Others may have accumulated credit card debt. There are emergency funds and money you need or want to set aside for your children and grandchildren. You may also want to travel more after you retire. It can also take a large amount of money. Take all of these things into account when calculating how much you need to set aside each year or month.
Choose the
good account
Choose where you will put the money you save. Saving money for your retirement is just the first step. You also need to know where to put that money so it can continue to grow. For example, if your employer matches every dollar you save, that would be a good place to start. If you are self-employed, you can open a personal retirement account through your LLC.
The best retirement savings accounts will give you tax benefits. If your company offers retirement plans, consider making full use of them.
Choose the
investments
Don’t just save. Invest your money so that it can continue to grow over the long term. Most retirement accounts offer a range of investments you can make. You can invest in bonds, stocks and mutual funds.