Retirement Planning, The Right Way

Retirement investment number

Are you planning for your retirement the right way?

Proper retirement planning means the difference between having a great retirement and a retirement where you will have to keep working.

How are you planning?   How are arriving at the amount of money you will need to accumulate before you end your career to be able to live comfortably for the rest of your life in retirement?

Are you working with a financial planner to come up with this number?   Are you looking at all sources: your 401 k, your IRA’s and personal savings and social security?

How To Plan For Retirement The Right Way:

You Need A Retirement Investment Number:

  • Stacks of Your MoneyYour retirement investment number is the amount of income you will need to carry you through your entire retirement period.
  • You need to know how much income you will need to maintain your standard of living when you retire.
  • And then determine how long that retirement income needs to last.
  • How long you will need this investment money for depends upon what you plan on doing at retirement: will you work part-time, travel, start a new career?
  • You can use a retirement calculator to arrive at this investment number.
  • You can work with a financial planner to also come up with your investment number.  Your financial planner may also use a retirement calculator.
  • Determine your retirement investment number early in your career so you have a target to work towards.

How To Reach Your Retirement Number:

  • Cut back your current spending.
  • Only buy what you need, not what you want.
  • Accumulate as much as you can, the power of compounding will grow your money.
  • Start as early in your career as you possibly can; your first job is the best place to start.   If you are well into your career, teach your children to start saving when they start their first job.
  • As long as the child has earned income, receives a W2, they can contribute to an IRA.
  • Use your first pay check every month to pay your fixed expenses.
  • Fixed expenses would be your mortgage or rent, car payment, real estate taxes, 401 k contribution.
  • Fixed expenses are “mandatory” expenses, they have to be paid.
  • Use your second pay check to pay for your variable expenses.
  • Your variable expenses include: utilities, food, entertainment.

Where To Get Your Retirement Income:

  • Social Security has become a very weak source of retirement income for future generations.   So you need to bulk up your other sources of retirement income.
  • 401 k plans are a very strong source.    If your employer matches your 401k contributions, you receive free money.
  • Individual Retirement Account’s are another strong source of retirement income.   Your investments can be more flexible than a 401k.   The contribution limits are not as high as 401k plans and the rules and regulations can be complicated, but IRA’s are a nice supplement to your other retirement planning sources.

By planning today for your retirement; you can only imagine what the type of retirement you will have.   But by not planning and preparing you can also imagine what type of retirement you will have, a hard one.

You are never too young or too old to plan and invest for retirement, start today, you will be glad you did.


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