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No matter how much you love your job, nobody wants to work forever. This is why it is important to consider how you will maintain your finances after you leave the workforce. This process is known as retirement planning.
Effective retirement planning requires compartmentalization. First, you need to know when to start. Second, you should calculate how much money you need to sustain your life. After that, prioritize your finances to meet your goals. Finally, strategize your accounts and investments.
When it comes to strategizing, many professionals suggest a more aggressive investment strategy in your younger years, followed by a gradually more conservative strategy as you get older. If you do not feel like managing these investments yourself, you can hire someone to manage them for you. If you’d like to know more about retirement planning, this article will explain where to start and how to plan.
When To Retire
Retiring isn’t just about when you want to retire. You need to ensure you have enough money saved to supplement the income you will no longer receive. If you are 62 or older, you can start claiming Social Security benefits. However, keep in mind that filing early means you will receive less money. For this reason, many people delay their retirement for a few years.
Start Planning Now
Hindsight is 20/20, which is why the best time to start planning for retirement is right now. Early planning will give your money more time to grow. You may be worrying that you haven’t started planning yet. Don’t sweat it. There is no time like the present. If you start now and invest strategically, you could see plenty of gains in no time.
Calculate How Much Money You Need
Once you have initiated your retirement planning, you need to calculate how much money you will need to be comfortable. To do this, calculate your current expenses, then anticipate how those expenses could change when you retire. If you need help with calculations, there are some handy retirement calculators online. If you have more specific questions, it may be time to consult a professional retirement planner.
Retirement Plans: Know Your Options
Once you have established how much you need to save, you need to decide which retirement plan is best for storing it. If your job offers an employer-sponsored retirement account, that is an ideal place to start. Many jobs will match a certain percentage of your contributions. However, if your workplace doesn’t offer a retirement plan, you can always open one on your own.
Choosing The Best Plan
When it comes to retirement plans, one plan isn’t necessarily better than another. Whichever plan (or combination of plans) you choose needs to work for the dynamics of your specific situation. More broadly, many people look for plans with various tax and savings incentives. This is why a workplace 401(k) with employer matching is an ideal starting point.
Additionally, you could consider any of the following plans:
- IRA
- Roth IRA
- SEP IRA
- Traditional IRA
- Solo 401(k)
If you have questions about any of the plans listed above, a professional retirement planner will be able to help you out.
Selecting Investments
Once you have chosen the plan that works best for you, it is time to select your investments. As mentioned, you can opt for a more aggressive or conservative strategy depending on your risk appetite. Consult a financial advisor if you have questions.
The offices of Merlino & Gonzalez offer real estate and elder planning throughout the Staten Island, NY, area. Our team is ready to evaluate the specifics of your case.