It’s never too early to begin planning for retirement, but if retirement is several years away, determining just how to best plan for the golden years may be difficult. The following is a list of tips that will result in proper pre retirement planning.
It’s impossible to predict your future health, but a look at your current health is one way to do so. As we age, our bodies naturally require more maintenance and care, which is why it is important to take care of them while they are young. Costs of medication, hospitalization, and other related expenses can produce a significant drain on income.
Save in an IRA
The government has made available the ideal savings instrument, where savings are tax-deferred and can compound more quickly than comparable taxable accounts. If possible, catch up and/or max out your IRA (or 401(k))
Manage your Investment Risk Level
Try to avoid two common retirement savings mistakes – being overly cautious, or taking excessive risks when deciding how much of your assets to invest in cash, stocks or bonds.
Pay off debts
Paying off debts, especially high-interest credit card and revolving accounts can be critical to your long-term financial future. High interest rates seriously affect your ability to build retirement assets, as that money is instead transferred to the banks and other third parties who hold the debt.
Consolidate with care
Very often people simply replace old debts with new ones (such as “consolidating” high interest credit card debt with lower interest debt); the bottom line is that if you wait until all your debts are paid off to begin saving for retirement, you may jeopardize your chances of achieving your retirement goals.
Create your own income stream
If you will not be receiving a company pension when you retire, you may want to consider other options that generate steady income, such as an income annuity so that you may receive a lifetime retirement income to cover essential expenses.
Stay on Track
Have money deducted automatically from your paycheck or set up automatic savings from your checking account – in essence forcing you to save before you spend. Review Your Company Plan
For proper pre retirement planning, it is vital that you know exactly how much money you can contribute to your plan, how much of an employer matched contribution you can expect, and what your options are as far as 401k investing. If you haven’t already, review the plan information provided by your employer, and if you still have questions, be sure to make an appointment with the company’s benefit’s director.
For all pre retirement related questions, you should consult with your certified financial planner, who will be able to offer advice and tips specific to your situation. Smart pre retirement planning today will allow you to make the most out of your retirement years tomorrow, a goal that everyone should strive for and keep in mind when deciding how much to contribute, budget, and save.