By Lorraine Zenge
Are you preparing for your retirement? This may seem like a silly question – especially if you are a young person just starting your career. However, no matter how far you are from retirement, it is important to start planning and saving now. This way, you can begin working toward a financially secure retirement and do what you’ve dreamed of doing in your golden years.
Have much will you need in retirement?
Regardless of your planned retirement date, it is important to look at how much you will need to retire. Start by establishing an annual retirement spending goal. I generally recommend that your retirement spending goal be approximately 70 percent of your current after-tax income. By establishing a retirement spending goal, you will be able to work toward the next part of the retirement plan – which is how much you need to save.
Calculating your savings
As a first step, I suggest you start with one of the many free calculators available on the Internet. You can enter keywords such as “retirement calculator” into any search engine to find a variety of these tools.
Do not hesitate to consult with a competent financial advisor for this part of the process, especially if you are over the age of 40. A competent financial advisor will help you review your retirement spending goal, your available assets, income you expect to receive in retirement and the impact of inflation. The advisor may also suggest how your retirement accounts should be structured to ensure that you have sufficient income for retirement.
Take the free money
If you are not doing so already, make sure to contribute the amount needed to take full advantage of your employer’s matching contribution to your retirement savings plan. Taking advantage of this benefit will help your retirement nest egg grow much more quickly over time.
After taking maximum advantage of your employer’s matching contribution, you should increase your contribution to your retirement fund every year that you work. One easy way to do this is to contribute part or all of every raise or bonus that you get while you work to your retirement plan. If you have managed to live without the raise in the time preceding the raise, you can usually afford to increase the amount that you are saving.
Get a reality check
Every year, you should check your progress in meeting your retirement savings plan. Conduct a financial review and consult your financial advisor as needed so you can determine what adjustments need to be made to your retirement savings plan. Frequent financial reviews will help ensure that your golden years are financially secure.