Plan Early for Your Retirement

Retirement can bring a lot of changes to your lifestyle. Whether these are pleasant or not largely depends on how much planning has been put in during your years of employment.

Financial stability and independence play a huge role in laying the foundation for peaceful and stress free retired years. Post retirement, you cannot fall back on a regular monthly paycheck to meet expenses, and that is why having a reliable stream of funds coming in from your investments is important. With proper management of your finances during employment, this can be achieved quite effectively.

Typically, a person’s post retirement phase may see medical expenses grow while vacationing or holidaying expenses decrease as the preference for staying in a familiar place surrounded by a support structure grows. Transportation costs would also come down as daily travel to and from the work place is not needed anymore. There are many such lifestyle changes that will translate into increased or decreased expenses.

The key factors that you should consider when planning for you retirement are retirement age, life expectancy, and the amount of money that you would need.

To start retirement planning, you should begin with an assessment of your current expenses and savings. A detailed working of current costs and future costs will help you arrive at the future income required to manage retired life comfortably. Experts believe that beginning your retirement planning at least 10 years in advance can ensure a steady and reliable income flow after you retire.

Investing in stocks is still a good option when you exercise some caution. However, complete dependence on the stock market is not advisable. Many people nearing retirement lost a large portion of their retirement funds in the recent crash.

Retirement savings vehicles like IRAs are preferred by many people because of their tax benefits. But it is important to understand the advantages and disadvantages before opting for any such plans. Typically, withdrawals are taxed and failing to withdraw minimum amounts can also lead to penalties.

Cutting back on liabilities like mortgages and other debts by increasing installment amounts or through refinancing options can help create savings to divert into a retirement fund.

Along with this financial planning, adjusting your current lifestyle to cut back on expensive luxuries will also help. For instance, a small, fuel efficient car can fulfill your transportation needs just as well as a fancy, gas guzzling one. Remember that any savings that you make today will pave the way for a more comfortable retired life.

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