3 Basic Retirement Planning Questions

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retirement planning

Have you ever felt like you’re having a retirement planning disconnect? Do you feel overwhelmed because of everything you read and hear about retirement planning? Not sure where to start? Well you are not alone. Lots of people have that same retirement planning disconnect. Unfortunately many people give up too easily because they think that it’s beyond them; that they don’t have the financial finesse necessary to invest properly. Well, guess what, you don’t have to be a financial wizard to plan for your retirement. All retirement planning needs is financial self-discipline and patience.

You need to discipline yourself to live on less than you earn. In other words, cut back on your spending. And that means, right now. Not when you get closer to retirement age or after you buy your first house or after the kids move out. No, you need to cut your spending, today. Think about it, you could be retired for 30 years. You will need enough money to last 30 years. That’s a lot of money. Where will you get all of that money? Unless you win the lottery, saving enough money to retire on is all up to you.

Planning for 30 years of your life takes time. Investments do not grow over night. Investment money grows ever so slowly. Be patient. Do not get discouraged because you think your investments aren’t growing fast enough. Money compounded over time will grow. Again, be patient.

Ask Yourself 3 Retirement Planning Questionsretirement planning

So much to think about, so little to do it. So where do you start? Start by asking yourself 3 basic questions.

#1 – Where Will You Get The Money?

Determine your current sources of retirement money. Do you have a pension? How about any Individual Retirement Accounts (IRA’s)? Employer retirement plans such as a 401k or 403? Don’t forget about prior jobs that may have a pension for you or a 401k account balance of your. Do you have any annuities or cash value life insurance policies? These investments are all good sources of retirement money. Determine that approximate value of these accounts so that you can determine how much more money you will need.

#2 – How Much Retirement Income?

It will take money to retire; but how much? One of the easier ways to determine how much money you will need to retire is to use a retirement calculator. It is easy to find a free retirement calculator that fits your personal needs. They are not all the same; some ask for more financial details than others, but there are numerous retirement calculators available. This will give you a basic idea on how much money you need to have before you think about retiring.

Retirement expenses will be different from working years’ expenses. A good retirement calculator will ask you for those expenses so you will need to make some good estimates. For example, your transportation expenses to and from work will be eliminated. Your work wardrobe will change to casual. You will most likely be eating at home more often so your food expenses should decrease. But on the other hand, your healthcare expenses may increase. And your leisurely activities will increase thereby increasing those expenses.

So far you have determined how much you currently have in retirement investments. You also have estimated your expenses, so you know how much you will need. Now comes the hard part, where can you find extra money to put away?

retirement planning#3 – Where Can You Cut Back?

This is where self-discipline comes in. If you are willing to do whatever it takes to make your retirement planning pay off, you may need to make some sacrifices today. In order to have enough money to retire some day can you stick to just the essentials today?

Are you willing to eat out less from this day forward? Will you cut back on some entertainment expenses? Maybe you can keep your cars longer before buying new ones. You may be able to save money by shopping your insurance premiums once a year. Will you forgo the long, extravagant vacations for shorter trips? These are all decisions you have to make, and they can be difficult ones to make.

But remember, it’s not what you make but what you keep that counts. Accepting the fact that you may have to cut costs today will make your retirement planning a lot easier. Once you reach retirement age if you do not have enough money saved you will have to continue working just to meet expenses. Is that what you want? If not, get started today. Ask yourself those 3 basic retirement planning questions and work on the answers. The kind of retirement you will have is all up to you. No body cares about your retirement more than you do.

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