5 Tips for Preparing for Your Retirement

Retirement may seem like a long time away from wherever you are on the spectrum of life. Maybe you’ve just paid off your student loans, or just recently graduated from college.  Maybe your kids are still in diapers, or maybe you’ve just made their first college tuition payment.  Whatever point you’re at in life, one thing is for certain- any amount that you save now for your retirement will not go to waste.

First things first, you need to prepare for your retirement needs.  What do you plan on doing?  Building a retirement home on the lake you vacationed at with your family, or sit in a rocking chair on the front porch and watch the world go by?  Whatever you choose, it’s going to take money. To help you in your financial mission, here are 5 tips for preparing you for retirement-

  1. Employer matching 401K Does your employer offer this benefit?  If so, are you contributing at least the amount that your employer matches?  If you’re not, you’re giving away free money- and that could mean the difference between playing a round of golf once a week and living in your daughter’s spare bedroom.
  2. Learn about your employer’s pension plan. If you work for a company that offers some sort of pension or stock option when you retire, good for you- it’s a somewhat rare find.  But, how secure is your job and how stable is the fund?  If the company files for bankruptcy protection, will this fund be liquefied? All good questions to ask your current employer/HR representative.
  3. Keep up on Social Security reform and benefits but don’t completely count on it.  “Experts” are estimating that you’ll need about 70% of your pre-retirement income to maintain your current standard of living.  Social Security (if it stays like it is now) pays the average beneficiary about 40% of pre-retirement income. 30% is a large gap, so you’ll still be needing an additional form of income.
  4. Invest in an Individual Retirement Account. Let’s say that Social Security pays you 30% and your employer-matched 401K pays you 40%- you’re still down 30%.  One of the best returns on your retirement investments is an IRA.  The government is allowing 4,000 tax-deferred dollars of your hard earned money to be deposited into this type of account,, making your checking account a bit happier come April 15.  This isn’t a “tax-free” venture however, as you will have to pay taxes on the funds you withdraw, but that won’ be for a while.
  5. Start Saving Something Now.The average American spends 18 years in retirement, so no matter your age, it’s never too early (or too late) to start saving something.  Granted, we do have this little thing called “Life” that can sometimes get in the way of our long term goals and financial plans, but nonetheless, the more you save now with a solid plan, the more comfortable retirement you’ll have.

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