Retirement planning can be a daunting and often confusing process. Our resource provides guidance on creating an effective retirement compensation plan and will lead you to understanding an amount that works for you as far as how much you need to retire on. Hopefully you have already initiated some retirement planning such as participating in your company’s 401(k) plan or opening up a Roth IRA account. Here are 10 important steps to adhere to when creating an effective retirement plan.
1. Start Early
The best time to start retirement planning is today. Too often, people ignore their future until it is too late and spend their fifties and sixties frantically saving and attempting to catch up.
If you’re young, start retirement planning now. Save or invest whatever you can afford so it will have time to grow over time.
If you’re older, start planning now as well. You may be behind the ball but regardless of your age, any preparation is much better than blindly going into the future.
2. Write Out Your Plan
Take time to write out your plan. Include when and where you want to retire, how old you want to be when you retire, what you want to do when you retire. Be sure to include both financial and non-financial aspect of retirement. Many people only examine the financial portions and go into retirement with no idea what to do with all their new-found time.
3. Share Your Plan
If you have a significant other, make sure they’re included in the planning process. If you have others in your life that have an interest in how you’ll spend your older days, make sure to let them know the parts of their plan that are relevant to them and possibly even seek their advice. While they do not have any control over your actions, their insight could prove to be invaluable.
4. Monitor Your Plan
Once you have your plan mapped out, make sure to follow it. Keep up with your investments to make sure they are growing in the way that you see fit. Adjust and change the lifestyle portions of your plan as well as necessary.
5. Work With Professionals
Work with financial planners, attorneys, accountants, and others who can provide professional services that will help your retirement plan go more smoothly. While no one wants to pay the costs associated with those professionals, their services could prove a great investment as time progresses and their services begin to pay themselves off with results and peace of mind.
6. Retirement isn’t dependent on a particular age
Just because others retire at 65 does not mean you have to. Plan to retire at the age you want and work towards that goal. While the 65 to 67 age range is when the full benefits of Medicare and Social Security become available, that simply may not be the best option for you depending on your circumstance.
7. Retirement planning does not finish when you retire
Just as you had to monitor your retirement plan during your career and working life, you need to monitor your plan once you’re retired and adjust it as necessary.
8. Visualize retirement
When planning, think about what you want to do when you retire, and how you want to spend the rest of your life as a retiree. Plan accordingly.
Far too often, retirement planning is done in mind of what current costs are. Make sure to plan with future costs in mind and remember that over-estimating will allow extra income during retirement.
10. Embrace Change
Look at creative ways to save and invest money that work for you. Make retirement planning your own, and don’t feel obligated to follow the same formulaic approach as everyone else.
If these ten steps are followed, then you can have an effective retirement plan that will allow you peace of mind into the future.