Have you evaluated your retirement plan lately? Many Americans have saved very little toward retirement or have not prepared adequately for leaving the workforce. According to the National Institute on Retirement Security, almost forty million households have no retirement savings. Whether you have a good retirement plan or no retirement plan, here are some steps you can take to ensure you are in good financial shape when you decide it’s time to retire.
Assess Your Current Plan
Your retirement plan will include a budget for retirement and the age you want to retire.
Take a look at your current financial situation and map out where you currently stand. For instance, look at how much you currently have in savings and look at all the other sources of income you have. If you have a pension plan, or if you will qualify for Social Security benefits, be sure to list this income. For Social Security benefits, you can go to their website and determine the kind of monthly income you can expect from by using their “retirement benefit estimator” tool. If you plan to work part-time in retirement, be sure to add this income to your plan as well.
Reevaluate Your Retirement Goals
If there is a gap in your current retirement savings and what you will need to retire, you can take steps to increase your savings by increasing your 401(k) and IRA contributions, spending less, and increasing your automatic savings deductions, etc. Talk with your Bookkeeping and Accounting Service and see if they can help you identify areas where you could spend less and save more.
Evaluate Your Age for Retirement
If you find yourself short of retirement savings, you may want to reevaluate your age for retirement. You can determine if your retirement age is viable by looking at the amount (conservative amount) of money you will need to live in retirement without running out of money. If you are falling short now, take some drastic steps to reduce the shortfall. A lot of money can be saved in the last ten years of working because at a later age most people have fewer expenses and can save more.
Evaluate Your Risk Tolerance
Each age brings a different risk tolerance for investing. The closer you are to reaching your age for retirement, the lower the risks should be in your investment portfolio. For instance, some people may consider increasing their portfolio risk to increase their savings in a short period of time, but this may not produce the results they are looking for.
Make Adjustments for Shortfalls
Do you have high-interest loans or credit card debt? It will be important to assess high-interest debt and create a plan to eliminate this debt. Consult a financial advisor and/or your Bookkeeping and Accounting Firm, as they may be able to help you adjust your plan to get you back on track or keep you on track with your retirement planning.
With careful planning and periodic re-evaluation, you will be in good shape to reach your retirement goals with ease and peace of mind!
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