5 Key Steps to Plan for Retirement

Juliet D'cruz

Updated on:

About 64% of Americans are not prepared for retirement. Almost half of them don’t mind, because they focus on making ends meet each month.

You can’t depend on social security to meet your needs. You may not even have a pension at the end of your career.

It’s up to you to plan for retirement now, no matter how old you are. You don’t want to get stuck working when you should be enjoying your life.

Keep reading to learn the top retirement planning tips to help you prepare for your own retirement.  

  1. When Will You Retire?

You have to know when you want to retire. It’s hard to predict because you might want to work well past retirement age. You might find yourself forced into early retirement because you were laid off late in your career and can’t find work.

If you’re not sure, look to the average age when people retire, which is between 62-65. Then calculate how much you have saved up and how many years you have until you retire.

  1. Know How Much You Need to Retire

What kind of lifestyle do you want to have in retirement? You should account for travel, gifts for grandchildren, rate increases, and healthcare on top of your living expenses.

Figure out those costs and account for inflation. Take a conservative approach and figure a 3% rise in costs each year.

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  1. Create a Budget

Now you have to create a budget for your retirement plan. Determine how much you can set aside for retirement each month.

Don’t be afraid to cut expenses now. The payoff down the road will be huge when you meet your retirement goals.

  1. Pick Your Retirement Funds

There are a lot of investment vehicles for retirement. You want to have a mix of retirement accounts, such as a 401(k), IRA, and mutual funds.

You also have to weigh your timeline against your comfort with risk. If you’re in your 40s and have nothing saved for retirement, you have to be aggressive to grow wealth quickly.  

  1. Continue to Plan

A common mistake that people make when they plan for retirement is that they take a set it and forget it approach.

You have to be an active participant in your retirement plan. You might find yourself in a situation where you need cash. You can consider using a company like RightWay Funding LLC to cash out your annuity.

Check your investments every few months and adjust your strategy as necessary. If you use a financial advisor, get together with them to ensure your retirement plan is on track.

How to Plan for Retirement

It’s never too soon to begin planning for retirement, nor is it ever too late. No matter where you are in your career, you need to have a plan for retirement.

The tips in this article show you the steps to take to plan for your retirement. Planning for retirement can get confusing.

Your best option is to learn as much as you can about financial planning. Check out the other articles on this site to get more financial tips.

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