Across the U.S., many Americans are recovering from the financial hit their retirement funds took as a result of the housing market crisis and subsequent market meltdown. Between the market, depressed home values, and the high unemployment rate, you may find yourself wondering if a secure retirement is an impossible dream…
10 Steps to Planning for a Secure Retirement:
1. Educate yourself on social security.
You can't calculate your retirement needs without knowing the numbers, such as how retirement age effects Social Security benefits and the total income you should expect. Consult the Social Security Administration's website to learn more.
2. Define your retirement.
You have to know where you want to go before you can figure out how to get there. Write down retirement objectives – be practical, but don’t focus on a budget. Prioritize your top five goals.
3. Know your needs.
Take enough time to estimate if and when you will have enough money to retire. You should have a savings target in mind. Unsure of that “magic number”? Consult the many online calculators available to help. This will help you identify shortfalls that can sabotage your secure retirement.
4. Catch-up.
While recognizing the market may not have helped your retirement, realize the larger problem may be your lack of contributions. Returns are important, but less significant over the long term than contributions. Aim to contribute 15 percent of your gross earnings, making the most of company retirement plans and IRAs.
5. Work longer.
With Boomers realizing they will need additional income to supplement social security, the number of Americans 55 and older in the workforce is now at an all-time high. Even if you find yourself out of work due to a layoff or health problem, make working longer as fun as you can by consider other employment or self-employment options that suit your interests. This will allow you to squirrel away additional money for a secure retirement.
6. Evaluate your health.
To get the most out of your retirement, you want to be as healthy as possible. Stay on top of preventive medical procedures – from physical exams to teeth cleaning – keeping your body in top shape. Commit to a healthier lifestyle such as exercise, adequate sleep, and a healthy diet to ensure a lengthy, enjoyable retirement.
7. Create a secure retirement income that lasts.
Don’t have pension? Create your own with cash rather than years of service. For pre-retirees in their 50s and 60s, the The Government Accountability Office suggests securing your retirement by investing up to half of your savings in an income annuity. These deferred annuities decrease the risk of outliving your money, one of the greatest challenges to a secure retirement.
8. Delay social security.
Determining the best time to receive Social Security benefits is crucial to a secure retirement. Claiming benefits before retirement age can cause you to lose a whopping 25 percent of inflation-adjusted benefits over the rest of your life. Delaying Social Security is the most cost-effective approach.
9. Don’t touch your retirement savings.
Withdrawing retirement savings early or to deal with other financial issues could cost you dearly in principle, interest, tax benefits, and withdrawal penalties. Implement a "look but don’t touch" policy.
10. Don’t procrastinate.
Find new ways to cut your expenses and save - starting now. Your retirement is not something you want to be a day late and a dollar short for.
Ensuring a secure retirement doesn’t rely solely on the market or your current employment status. You are the sole driving force of a secure retirement. Take control today and make the necessary changes you need in order to safeguard your financial future.
Tags: Retirement, Professionals
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