Category Archives: Retirement

5 Very Important Things to Do Before You Retire

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Financial management is not a onetime responsibility. It is a continuous process that starts at adulthood and continues till your retirement and beyond as well. The way you manage your finances has a great impact on your retirement savings.

According to the National Institute on Retirement Security, nearly 45% of the working-age household do not have a retirement account or plan and more than 60% of the working households with retirees have less than one times their annual income. This data is scary since you need your money to make your retirement more comfortable.

But, having a retirement plan does not guarantee an enjoyable retirement time unless you make the right financial decisions.

Here are the financial milestones you need to reach before you retire:

Start Creating Healthy Financial Habits By 25

This is the perfect age to begin your savings for the future. Create healthy saving habits and save as much as you can. Put the money towards emergency funds and health care. This is the time when you take more risk and switch jobs. Having an emergency fund gives you protection against any unexpected expenses that may come your way. In case you lose a job or quit your job, an emergency fund will cover your expenses for at least six months.

This is also a great time to start your retirement plan so that you can gradually build up the saving for that perfect retirement time.

Start paying off your debts by the age of 30

By 30 you have an idea what life is going to be after this. Soon, you will marry, have kids, buy a house, buy a car and have lot more responsibilities by the time you hit 40. At this time you need to make some major financial decisions:

  • This is the time you start paying off your student loans and other debts including your credit card debts.
  • Get a life insurance and make a will to make it easier for your family. It is a great way to provide your family protection in case something happens to you.
  • Increase the percentage of the money you are saving in the retirement fund. By 30 you are settled in your job and save more money comparatively. So it’s only reasonable that you put more money towards your retirement fund.

Take care of your mortgages between the age of 40 and 50

By the time you reach the age of 40, you should be more comfortable financially now that your student loans are paid and your kids going off to college or starting on their own.

  • Try to pay off your mortgages. After the retirement, you will feel financial stress. Paying off the mortgages by the time you reach 50 or 55 is good news.
  • Clear all the credit card debts you have before you retire. Retiring with debts hanging over your head is not a great idea. You should start paying off your debts way before reaching 40 so that you can easily reach the financial milestones before you retire.

Increase the retirement savings to the maximum

Since you never know how much you are going to need for your retirement, it is imperative to save more as your age progresses. If you are planning to retire in your sixties then you should plan on saving for 25 years of retirement life.

  • You will need 80% of your annual pre-retirement income to live comfortably when you retire. You will need to increase the amount of money you are saving for your retirement as the time passes.
  • Plan ahead and calculate how many years of retirement you need to save for. Your health condition will determine the years you want to plan for.

When you reach your 60’s

This is the time you need to fine-tune your financial goals. Now that you have saved so much and almost on the finishing line before you retire, you need to narrow down your goals. Seeking the help of a professional financial expert will help you establish a strong retirement goal.

  • You may need to cut down on costs and save even more for the retirement.
  • Make significant changes in your lifestyle, expenditure, and other activities that directly impact your retirement savings.
  • Review your will and life insurance to make sure they are in tune with your current financial situations.
  • Look for long-term care insurance and other schemes if you are married. This will help take care of your health and living needs at an advanced age in case you are incapable of taking care of yourself or have no one to take that responsibility.

These are the 5 important financial milestones that you need to reach before you retire. But, if you have already missed a few of them, it does not matter. You can start saving anytime you want. Have a plan for your retirement life and adjust your financial goals accordingly so that you can have a great retirement time.

Retirement Planning Is A Necessity Not A Luxury – Understanding 401k Plans As Well

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It is an undeniable fact that you will reach some point in your lives where you are poised to retire from your professions. You dream of a life where you will simply relish traveling and having fun for the rest of your time. However, mind it that there is always a value that comes with it.

A safe and comfortable life doesn’t come easy or cheap. Keep in mind that you will not have regular financial gain coming back in and your expenses can just persevere gushing in. This implies that you would like to arrange on a way to save your cash in an exceedingly systematic way so as to relish it in a while.

Retirement planning – Why do you need it?

Most people question themselves why they have to do retirement planning. Taking the help of a pro for this is the best approach to tackle the problems. This is often vital because you would like some type of security after you reach the age of retirement. You will be able to begin to plan as early as your twenties. If you propose your finances with an early purpose in your life, you are presumably to possess fewer monetary commitments. You will be ready to have an enormous bank of resources by the time you retire after you begin early.

What you need to consider?

There are some things to contemplate once you start aging. You ought to take into consideration the medical expenses and vacations that you will have while reducing prices like your child’s education and rental fees if you own a house. You ought to additionally confirm the number you would like to often save at this moment so as to succeed in your goal. It will additionally profit you to pick out the plan that may assist you to secure the amount you need.

The 401k investment set up has apparently become a common theme, therefore being the change that could possibly be a giant part of the whole set up. According to this plan, an employee has to direct a certain part of their pay into a pension fund that they can make the most of after retirement. But the best thing about this type of plan is that your employer also can make a contribution to the present set up and it’s exempt only just make sure you don’t max out your 401k plan.

What is the next step?

But the important question that arises is that what happens when you change a job. There are many choices available to you with a variety of facilities when you consider the 401k retirement option. A right IRA will allow the contributions in your plan to be transferred into a personal plan. The money doesn’t go anywhere as your previous employer can transfer it straight into your personal account. This technique has edges like no system of penalties which is why the taxes don’t seem to be withheld.

How it works?

If you have got stocks in your last employer’s company, your contributions may be handled in two ways that. The first way is that you simply transfer the stocks directly into your Individual plan while the stocks don’t get liquidated. The second choice is that you simply sell the stocks and pay the change into your account at intervals say, a sixty day amount. If you fail to make the most of the account at intervals of sixty days then you may need to pay the required tax there on.

In another way, you can move your current 401k plan to your new employer, if they settle for the 401k plan change. This typically works if you have got a brand new job before you leave your previous one. Take the time to examine out the new employer’s investment choices to determine if this is indeed the most effective choice for you.

Deciding on the right plan

The final choice is to make the most of the funds that are present in your 401k retirement plan. This isn’t a cheap move as an employer is certain to withhold some of the funds for tax functions. You even have to pay revenue enhancement and a penalty for taking the live before you retire.

Save as much as you can

Lastly, begin saving cash from this moment. Planning early is helpful in the latter part of your life and it can assist you in minimizing the burdens that you had to bear financially throughout your life. Who doesn’t want a peaceful, enjoyable and a stress-free life after they retire? And the answer is almost everyone. But, that won’t happen on its, own.

Today’s hard work will pay off later

You have to start to lay the foundations of your stress-free life from a very early period of your life. Only then can you dream of that fun or peaceful life you always wanted with your loved ones. Try to save as much as you can for your retirement planning and as much as your lifestyle permits. There is no barrier on how much you should save. No one really knows that, it just depends on your capability to earn and save after living a comfortable life with your family.

This is why it’s said that planning retirement is no longer a luxury; it has clearly become a necessity and everyone must do it or regret later. Plan your retirement instead of allowing your retirement to play you.

How to Prepare for Retirement – The Necessary Preparations

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How to prepare for retirement without fear or anxiety, that is the goal. The necessary preparations can be made in a simple method, breaking things down along the way, and you can make sure that you are ready without the stress of last-minute breakdowns that sometimes seem essential to these sorts of plans.

Retiring is a major life change that should affect the rest of your life, so you don’t want to jump into it without being ready. How do you know you’re ready? Well, there are two major areas to cover your financial life and your emotional one.

For your finances you need to know what funds you’ll be living on in the immediate future, and long term. You can start making withdrawals from your 401k and IRAs when you reach fifty-nine and a half years old. You’ll want to decide when you want to start receiving funds from social security, there is some debate on what age is the best to do that at. If you have other income sources for this time you’ll want to take those into consideration as well. Whatever it is you believe you’ll need to live on each year, you’ll want to make sure your income sources add up so that you’ll be comfortable and able to do the things you want to do.

You also need to make sure that you have enough funds to really retire long term, if you live to ninety five or a hundred years old are you still ready? It would be better to work a few extra years now and do some catch up contributions to your 401k than to be ninety years old and broke.

For your emotional well being you want to make sure that you have plans for yourself! You’re about to have a lot of time on your hands, finally–so what will you do with it? Do you want to travel? Do you want to learn some new skills, pursue your interest in the arts, or golf? Make sure you’ve thought about this so you don’t end up bored and depressed–there are a lot of options for things you can do now, don’t waste this exciting time.

Retirement is not something you can do overnight. It may take many years to prepare for opting for the correct time to retire! Here are some of the things that you can do while you get ready for retiring.

Assigning the power of attorney

If you want that your finances are managed effectively, you may assign a power of attorney. It must be done according to your wishes, and the decisions should be made precisely. Indeed, note that the person who holds the power pf attorney has the full authority to manage all your financial activities if you are incapacitated. So, it is essential that you choose someone you trust completely and have the best interests for the people at heart. You can opt for setting up a revocable trust and effectively your bank as your trustee. After that, it will be the trustee’s responsibility to handle all the bills, filing insurance claims, and selling/maintaining your home.

Making a will

It is particularly essential for the people who do not have an immediate family to create a detailed vision of their wealth and how they would be distributing them! It can also include the different aspects of burial arrangements guardianship of any of your pets. This is where the last will and the different testaments come in.

If you are really drafting the bill, take enough time to understand and abide by your state’s rules. Sometimes, you may also have some people to witness the will created by you. In the end, you will require a trusted person whom you may ask to carry out your final wishes as an executor.

Naming a medical proxy

To understand this, it is essential to understand who a medical proxy is? A medical proxy will have the legal authority to make any decision relating to your healthcare. It is when you are deemed incapacitated. This may also include the decision to move out of your home or into a nursing home! So, again you have to choose carefully. The most common choice is a domestic partner or a spouse.

How about writing a living will?

Indeed, that can be a functional idea for getting started to the best approach to be ready for retirement. This would be dealing with the details that would outline what type of medical care you will require in those unfortunate dire situations! It is mostly related to end-of-life treatment procedures. If you are willing to write a living will, you will find the process similar to drafting your last will and the required testaments.

Again, you would be required to understand the laws for these filings that are prevalent and functional in your state. In this, once you have completed living, you have to make sure that you share copies with your doctors and the responsible person. This is the same person whom you have named in the documents.

Planning for long term care

If you see, long-term care facilities are becoming more and more expensive in recent times! If you need good nursing care at your retirement, you have to plan its expenses from today onwards. It is also possible to qualify for Medicaid. It helps you pay for the long-term care bit for this, and you have to spend down your assets first. You should always consider and stick to the plans entailing the cost of long-term plans. It will determine how much you have to save for retirement.

Indeed, if you have not considered the required amount that you must be saving for long-term care, you can start off with the process today! Remember that if you depend on Medicare, you are not going to get any of your expenses paid through it!

Downsizing

If you are currently living in a larger home, consider your requirements for the rooms that are vacant! You can also consider the sot of living for yourself, dealing with your location and the others. If you are good to shift to a place that would help you save more, do it! Indeed, swapping your house with a tiny house can eventually save a little more for your retirement.

It is never too late to get started!

When you find that your planned retirement date is a decade away, it would seem like a very distant event. But at the same time, setting up and following effects to the realistic goals would just be the best step in on a excellent retirement condition. It is essential to note that you are not alone, irrespective of the date you start saving for your retirement plans.

The bottom line

With all of that in mind, prepare for retirement by taking each part of your future life and combing the pieces over to make sure that the necessary preparations for your life are taken care of and you’re ready to dive in.