Essential Retirement Planning
There are several steps you can take in planning retirement in these troubled times. Many people have been unemployed or taken pay cuts, plus prices on gas and food continue to rise. Retirement planning is something that needs to be started when you're young.
If you are near retirement age, there are many things to consider before you retire, so that you can enjoy life afterwords. There are many financial health calculators online which will help show you the big picture. Strive to pay off all credit card debt, and if possible pay off your home. The less debt you have at retirement, the easier it is to manage if you should have some medical problems or other unexpected financial burdens.
One item that has affected our retirement was something that is usually not mentioned in planning for retirement, but it is very important to maintain good health. Health problems are very expensive to treat and even if you're on Medicare, the future of this program is a bit uncertain. Of course, you also purchase supplemental insurance which helps, but if you can take some steps to change your lifestyle when you're younger and prevent health problems that certainly puts you ahead of the crowd.
Obviously not smoking is a no-brainer, as it puts you at risk for multiple diseases. Building up your bank account and neglecting your health doesn't work well long term, as even if you have the wealth you may not be well enough to enjoy life. Eating healthy might cost a little more money now, but it is worthwhile to have a healthy body. Also, get an occasional physical, even if you don't feel ill, as a simple problem might be found and healed because it is found early.
Pay High Interest Credit Cards First
Usually the best way to save money is to take at least 10% of your income and have it put into a savings account on payday. If you do this each paycheck you will be surprised at how quickly your savings account will grow, however, do not save money if you are paying off high interest credit card debt. It is smart pay off high interest debt first, particularly when the savings account interest rate is so low. When your debt is paid, try to stay debt free and focus on the savings.
401Ks, IRAs, Roths, Equities
Saving money in a 401(k) plan has great benefits because it defers taxes and quite often your employer will match some of the money you save. If you don't have an employer that will match your money it makes the 401(k) plan less attractive. Also, some plans have very high fees and you want to avoid them because deferring the taxes will benefit you less if you are paying a 1.5% annual expense fee. There is also the option of IRAs or a tax efficient index fund. It is important to consider how much you will be withdrawing from your 401(k) when you're retired as large amounts will be taxed and it could put you in a higher income tax bracket, depending on pension funds and other money.
Another savings possibility is in equities held outside of the retirement accounts which can be taxed at the long-term capital gains rate of just 15%, even for people in the highest tax bracket. It is important to create a plan to track your progress.
401K Stock Plan
Manage your Money
I think it is hard for most of us to save money today because we live in a society of instant gratification and we really don't want to live below our means. Of course this means we have to accept the idea of living with delayed gratification. It is ideal if you can save the money up first before a new purchase and then you won't have debt if possible. We had to make a couple of purchases of appliances and used a 0% store credit card with a year to pay, then we make monthly payments so that the item is paid off well before interest would began.
Another thing that you might be able to do is to look into refinancing your home with a 10 or 15 year mortgage if you now have a 30 year mortgage, assuming you can get a much better credit rate. Fortunately, we had done just that a few years before my husband had a stroke. When he had the stroke (at 59 years old) we did not owe much on the house and were able to take money from our 401(k) and pay it off; otherwise we would have lost the house. There are not too many things that feel better than living in a house that's pay for it at our age.
Start Retirement Saving While You're Young
Ways to Make Ends Meet
If you are living in a very dire situation you will have to figure out how to live on Social Security payments alone. Sit down with your mate and come up with a plan to live with as there are ways to cut back expenses. Can you use the Internet or services such as Skype to make phone calls and not have a land line? Use generic medications always if possible. Instead of expensive vacations you might take some road trips that are not so far away and will save you money and yet let you enjoy a little travel.
Not all part-time jobs involve tiring hours and little pay. First look at your hobbies and sometimes they can be turned into income makers and this would be something you enjoy. If you like writing, try Hubpages as there is money and friends to be made. Some people start their own blog and do well that way. Other people like to refinish old furniture or fix bicycles; it is simply up to what you enjoy doing
101 Ways to Retire--or Not
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The other option that some people choose is to delay retirement. Many people have dreamed of early retirement, but that is not always possible. Others enjoy their work and do not mind working two or more extra years, which will continue their income, plus their health benefits. Again that is a personal preference.
The earlier you start planning retirement the more money you will have to live on earlier used which will be more comfortable and stress free. Retirement will hopefully be a great time in your life to do all those things in your life that you have not had time for in the past.
© 2011 Pamela Oglesby
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