Retirement planning is becoming more important than ever before beause of several powerful societal forces. People are living longer after retirement, with fewer defined benefit pension plans, the trend toward multiple job and even career changes, and rising health care costs. Added together this all makes planning for retirement more critical now than ever before.
Regardless of your age, where you work or your life situation, you should start planning for your retirement as soon as you can, immediately if possible. Retirement planning can be argueably more critical than saving for a childs college tuititon. They can borrow for college, you can’t borrow for retirement expenses. By beginning to plan now, you can take steps toward the retirement income you want and possibly need.
Retirement planning involves identifying what you want and what you need. Then developing a plan to achieve them, acting on this plan, reviewing and revising your plan as the retirement years approach.
Ask yourself these questions:
1. When do I intend to retire?
2. When I retire, will I start a new part-time career?
3. How long after I retire do I think my money will need to last?
4. How much money will it take to support my household?
5. What do envision my lifestyle during retirement to be like? Days spent golfing, traveling the world? Staying home and puttering?
6. Where will I live when I retire?
When you know where you’re going, it’s time to figure out how to get there. Through retirement planning, you’ll answer questions like this:
1. What do I need to do to take care of my health care needs during retirement years?
2. How much money do I need to save to meet my goals?
3. How should I invest my money to maximize my retirement savings?
4. In what way will my assets, liabilities, expenses and savings change during retirement?
The sooner you start to save and plan for your retirement years, the more prepared you will be. The power of compounding means that with early planning a small investment each year could potentially create a portfolio large enough to meet your retirement needs.