Roadmap to Retirement
A roadmap to get where you want, when you want
Destination: Retirement
When you go on a road trip, you look at the directions ahead of time to make sure you know exactly where you’re going and how to get there. Retirement should be no different. Whether you are 25 or 55, here are five crucial steps to map out your journey:
Make a financial plan
Retirement is a long-term investment that should be balanced with day-to-day expenses, debt management, insurance and other long-term savings goals. To start, evaluate how much money is coming in and how much money is going out. If the money going out is greater than the money coming in, it’s time to make some changes.
Consider “What’s my vision for retirement?”
How do you see yourself spending retirement? A small farm on the outskirts of town? Traveling the world? On a beach down South? Settled into suburbia close to the grandkids? When do you plan to retire? What expenses do you expect? All of these questions will help you determine the amount you need to save to afford your vision for retirement. The more specific your vision, the more effectively you can plan for it.
Explore your savings options
Many employers offer a 401(k) retirement plan – if you don’t have an employer-sponsored plan, you can set up an individual retirement account (IRA) to benefit from the same tax-efficient savings status. Either way, it’s critical that you identify a savings method and start saving as early as possible.
Contribute, escalate, and keep escalating
Start contributing as soon as you are eligible and also make regular increases. It’s important to develop a habit of saving – otherwise, down the line, you may need to make significant lifestyle adjustments to save more in less time. You should aim to contribute 10-15 percent of your salary to your retirement plan savings. If your employer offers a matching contribution, be sure to contribute at least enough to receive the maximum benefit of this feature – this is essentially free money in your retirement account.
Take a comprehensive approach
A comprehensive retirement plan goes beyond a 401(k) or IRA. It should also include health insurance, life insurance, an estate plan, power of attorney designation and a living will. These may not always feel like pressing needs or be particularly fun to think about, but for the sake of your loved ones, it’s important to be prepared. Take the extra time and resources now to avoid complications later.
This website does not provide investment, tax, financial or other advice. It is provided for informational and educational purposes only and is intended to be used as a guide.