Some Effective Tips for Retirement Planning

Imagine yourself at your farewell party as you leave full-time employment and head into retirement. If, on that day, you were to create a line graph representing your retirement savings efforts over the course of your career, that line should tell the story of your life.

For all the preaching we do about saving for retirement, we know that life happens. Financial lifecycles tend to reflect the other parts of our lives. And you know what? It’s OK. Here are some tips you can use to adjust your retirement strategy as you navigate what life throws at you.

For all the preaching we do about saving for retirement, we know that life happens. Financial lifecycles tend to reflect the other parts of our lives. And you know what? It’s OK. Here are some tips you can use to adjust your retirement strategy as you navigate what life throws at you.

Start Early

Never think it’s too late, and start as early as possible. If you happen to be young, then you should consider investments, IRAs and savings. Being young gives you the opportunity to be aggressive about your finances and take some risks as far as investments are concerned. If you’re older, then you’ve got to be a bit more cautious and not take any unnecessary risks. However, don’t make the mistake of letting it be, for otherwise it’ll be too late.

Plan Accordingly

It’s imperative that you plan according to your individual income and financial circumstances. It’s also important for you to consider the kind of lifestyle you’d like to lead when you’ve retired. Take time out and draw up an effective plan and work on it accordingly. When working on a retirement plan, you need to create a budget specific for retirement. Here are some ways to help you –

• The changes: Make sure that you think about the changes that can come about in future and plan your retirement budget accordingly.

• The need: You should come to a decision about how much exactly you’d require to live a comfortable lifestyle. Don’t consider your present salary as a guideline.
• Plan long: It’d be a good idea to plan for a long retirement. So you should save accordingly so that you don’t face any dearth.
• Consider inflation: Take a leaf out of the book of today’s economic crisis. Keep in mind inflation when planning for retirement. Increase your investments if required.

Avoid Withdrawals

Avoid early withdrawals from your account. If you stop working before retirement age because of a layoff, raising children or health concerns, look for alternative ways to stay afloat. No one can say what Social Security will look like in 20 years and many companies are moving away from pensions. Your retirement savings may be the main source of income you’ll depend on in later years, so don’t deplete it unnecessarily.

Pay Off Your Debts

Don’t make the mistake of carrying over your debt burden to your post-retirement years. Hence, when you start your financial planning, do make it a point to pay off all your debts at the earliest and then save up for retirement. Here are a few ways by which you can cut off spending and use that money to pay off debt.

• Food: This is one area where you can actually save a lot and use that money to pay off your debt. Instead of buying lunch at work or buying that cup of coffee on your way to work, try making them at home. This is healthier plus saves you a considerable amount at the end of the month.
• Luxury: Don’t just splurge on anything and everything that you feel like. When you feel keen on buying a particular item, you can try a trick. Take a deep breath and ask yourself, do you actually require this thing for continuing life? Then answer yourself honestly. If it’s yes, only then buy that item else don’t.
• Time: Make it a habit to spend more time at home or with your family. Be wise enough to understand that it’s really no big deal to spend hours outside the house. You can spend quality time with family or friends back at home itself and it’d save you your precious dollars as well.

Step Up the Intensity

Finally, what you’ve got to do is step up the intensity of your plan as you start nearing your retirement age. Try increasing the amount that you keep aside as retirement savings. Also, try and increase the frequency of your contributions.

If you look back at the ups and downs of your retirement savings on a chart someday, you should be able to recognize the events that shaped your contribution levels and account balance shifts. From contribution rate changes to account withdrawals, your retirement strategy reflects what’s going on in the rest of your life

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