During 2020 more than 28.6 million Baby Boomers stated they’d left the workforce or, in other words, retired. If you’ve not reached that stage in your life yet, you might be wondering ‘how to start retirement planning?’
It’s important to take retirement planning seriously because we’re talking about your future here. Lucky for you, we’ve taken the time to create a brief guide that will help you get started and manage your funds in preparation for retirement.
It’s Never too Early
The first thing to know about financial planning for retirement is that it’s never too early to start planning. The earlier you start, the better off you’re going to be.
The more you save now, the more it will appreciate over time. When planning for retirement, the first thing you need to do is consider the types of retirement plans your organization offers.
If you’re self-employed, there are other options such as IRA accounts that you can open to set aside money as your paid to save for retirement. Ensure you obtain all the information you need in both cases because there are guidelines that you must follow before you’re given access to your retirement money.
If you plan to place money into a 401k, ask your employer about their matching program. Depending on the employer, they’ll match every dollar that goes into your account.
There are several types of IRA accounts, including:
- Simple IRA
- Solo 401k
- SEP IRA
- Traditional IRA
It’s best to sit down with someone to discuss these options and decide on the one that works the best for you.
Calculate Retirement Cost
After you’ve taken some time to educate yourself about your retirement options, the next thing you need to do is calculate how much money you’ll need to retire. You need to consider your expenses and what you’ll need to survive.
For example, if you’re planning to hire someone for home care services, it’s best to factor in the cost of in-home care as you prepare for retirement. That way, you’ve got a better understanding of how much money needs to be designated to your retirement fund each pay period.
Make Saving a Priority
We understand that you want to live in the moment, but it’s essential to make your financial goals a priority to have the funds you need to retire. There might be other pressing things in your life, but saving for retirement should be one of them.
We recommend you create a list of your financial responsibilities so that you’re able to designate funds to each one, such as:
- Paying off student loans
- Lowering overall debt
- Placing money in your retirement fund
By doing this, you’ll understand where your money is going and have a plan for the excess money after bills and other necessities are taken care of.
How to Start Retirement Planning?
No one ever thinks about growing old, but it’s essential because you don’t wake up one day and know how to start retirement planning. Remember, the sooner you start planning, the better, and there are several ways to do so.
Have you started planning for your retirement? If not, review this post again and check out some of the other ones we’ve created!