Retirement
Retirement: Planning Your Exit Strategy
Retirement is your reward for a lifetime of hard work - and it should be rewarding: More time with family and friends. Doing only what you truly want to do. Travel and hobbies and relaxation.
But a poorly planned retirement can prove anything but restful and satisfying. So, begin your retirement planning as early as possible. It will pay terrific dividends later in life.
Here are some tips to get you started:
Start saving now, through your job or on your own - or preferably both. Take full advantage of a 401(k) account, if your company offers one. Chances are your company will match all or part of your contribution - the equivalent of a free, annual bonus.
Also look into IRAs (individual retirement accounts). These are savings plans that offer tax benefits if you use them solely for retirement. A Roth IRA allows you to withdraw money without paying federal income taxes; a traditional IRA allows you to deposit money without paying taxes on those funds. Check with a tax specialist before deciding which is best for you.
- Think long-term and develop a realistic long-term budget. You may live 20 or 30 years beyond retirement, and you don't want to outlive your savings. List the annual costs now covered by your paycheck - mortgage, insurance, food, utilities, and so on - and multiply by 20 and then 30. Make sure your pension (if you will get one), your Social Security and your savings and investments will at least cover those costs. See the link below for a retirement expense worksheet calculator.
- Be sure to diversify your investments and, as you grow older, reduce your exposure to risk. Many experts suggest slowly shifting your portfolio, moving from a concentration on individual stocks and mutual funds into less volatile securities such as corporate and government bonds, certificates of deposit and cash.
- Give considerable thought to health insurance. If you are under 65, chances are you will have to pay for your own health insurance. Even when Medicare kicks in at 65, supplemental policies will put a dent in your savings.
- Professional assistance is virtually a necessity at some point and you certainly want to trust the advice you get. Refer to the Florida Department of Financial Services website to verify whether a securities dealer or broker is licensed at www.fldfs.com
- In addition to finances, plan ways to remain active - clubs, alumni groups, politics, part-time work, charities. Don't underestimate the emotional impact of retirement. Stay active. Stay engaged.
You can find an automated retirement expense worksheet here: https://personal.vanguard.com/us/PlanEdu/Retirement/PEdRetEvalExpWrksht
Here is a calculator that will help you determine if you are saving enough for retirement: Retirement Plan Calculator
Comprehensive advice for planning retirement is available here: www.aarp.org/money/financial_planning/sessionseven/retirement_planning_overview.html
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