If you are like many Americans, planning your retirement should begin with your first job and taking advantage of one of most important financial planning steps a person can make: invest in your retirement account. Most employers will offer a certain percentage and the key to have a comfortable retirement is to start investing in your retirement early. That is not the only means of saving for retirement, but it is certainly one of the more lucrative and one of the easiest steps along your path to a comfortable retirement.
Lifestyle and Living Arrangements
Next step is to look at the lifestyle you have now and the lifestyle you would like for retirement. If you are looking to travel extensively, budget accordingly. Do you have family that lives far from you and would moving closer to them be a goal upon retirement? Factor in the elements that are most important to you - I would suggest picking only two or three things that you would want to accomplish or indulge in once you've retired and ask others who are already retired and done something similar what hurdles you may need to cross. No one knows what retirement is like better than someone already living it. While every generation will have its challenges, it's good to get the perspective.
Know What You Need
For any financial advice, this is the cornerstone. Knowing what resources you will need to live on now and what you will need for retirement is the key to a comfortable and successful retirement. Set a solid savings goal. Think long term and set a figure that you want to have saved and an age that you want to retire at. Next, all you need to do is break down that goal into smaller sections for you to accomplish within a given timeframe. Set aside all or a portion of any windfalls you may encounter to help cushion your savings. You cannot save enough for retirement if you do not know how much money you will actually need.
Annual Portfolio and Savings Review
At the end of the year, it is very important to review your IRA, 401K, savings, and other investments you've created for retirement and with the help of your personal banker, financial advisor, or accountant, see if you are able to invest any more into your retirement for the year. In doing this, you maximize your retirement allotment and possibly shift you into a lower tax bracket. As each state has its own laws regarding savings and retirement, it is best to contact someone regarding what you are able to do to take advantage of your retirement.
Planning ahead for retirement doesn't need to be expensive or time consuming, but the dividends can be substantial. A solid plan starts with clear goals, both short term and long term, and knowing what it takes to reach those goals. Reviewing your plan annually keeps you up to date on how you are doing on those goals.
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