Retirement Planning and Bankruptcy

Retirement Planning and Bankruptcy

As you progress through your bankruptcy proceedings you’ll probably spend a lot of time thinking about your current expenses, your financial future, and the fact that you currently have no savings. As you move forward, however, you’ll find yourself preparing a new budget – one that keeps you within your means – and, as such, you’ll need to learn how to save again. So while you’re preparing to save again, what actions will you take to ensure you’re also preparing not just for a financial emergency but for your future retirement?


How Will Live be Different after Retirement?

After you retire you will experience a number of life changes. You may not need to spend a ton of money on business attire and dining out with colleagues but maybe you plan to spend more time with the grandchildren or traveling the world. Will these changes balance out, end up costing you less, or require you to somehow accumulate more money than you’re currently earning.

Don’t forget to think about your living situation as well. Will you own your home, still have mortgage payments, or will you be renting? Maybe you’ll be lucky and get to live rent free with your own children (don’t hold your breath).


What Will I Really Need?

After you think about how your life might change you can start considering exactly how much money you’ll need per year to live a comfortable life. A lot of experts claim you’ll need approximately 70% of your current salary to continue living the same lifestyle you had before retirement.

What Income Can You Expect to Receive?

Not every penny you need to live after retirement will come from your personal savings. Some employers offer pensions for long-time employees and many will go on to collect social security benefits.

Maybe you are someone who bores easily and needs to keep moving. In that case you might want to consider getting a part-time job after retirement in order to supplement your pension or social security benefits. If that is the case then you should still continue to save but may not need to put as much aside as you originally thought necessary.


How Will I Save for Retirement?

Including your retirement in the budget planning process after bankruptcy, regardless of your age, is incredibly important. Start by checking with your current employer to see if they have a retirement account plan. Many employers will match your contributions up to a certain percentage each year. If your employer has a plan like this than you should contribute the maximum percentage that he is willing to match. For example, if you get paid $1,000 per month and your employer states he will match your contribution up to 5% of your salary than you should contribute 5% (or $50) to the plan each month. Your employer will automatically add another $50 to the plan, meaning your retirement savings will virtually double – for free!

You don’t have to save through your employer, either. Ask your bankruptcy attorney to refer you to a financial advisor as well. You might be able to open another type of retirement savings account and make contributions, based on your new post-bankruptcy budget, as you see fit.

Planning for retirement is just as important now as ever. The advantage you have now is the clean slate that bankruptcy has afforded you. Include retirement in your budget now and you’ll never have to worry about the future.

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