Thinking About Retirement in 2017
- January 7, 2017
- Posted by: Jeff Gitlen
- Category: Personal Finance
For most working Americans, retirement is a far-off dream or something that will happen so far down the road that it isn’t worth thinking about today. However, even if you’re just starting out in the workforce, it makes sense to start planning for your retirement today. After all, the earlier you start, the easier it is to have a successful retirement. If you’re older, it’s even more crucial to think hard about your retirement so that you can take steps to make it happen sooner rather than later.
Wherever you are in your working years, make 2017 the year that you put together a realistic game plan for your retirement. From fact-finding to paying down debt, learn the steps that you should take to make sure that you can retire on time and live comfortably in your golden years.
Do A Retirement Assessment
You can’t make a plan for anything without knowing what your goals are. When it comes to retirement, this means crunching some numbers to make sure that you have enough saved to be able to live that way that you want to live after you’ve stopped working.
There are many online calculators that can do the math for you. These tools will analyze your projected expenses against your savings to determine how much you need to save. Make sure that you look at where your money is invested, how your investments are performing and that you are contributing as much as possible to your accounts to maximize your retirement savings.
In addition to performing an analysis of your own retirement holdings, you should learn the facts about your accounts and the current law to determine exactly when you can retire and access your money. This includes looking at the different retirement savings account options, the rules regarding Social Security benefits, and how you can increase your income by investing in either tax-free or tax-deferred accounts. It is also a good idea looking into any federal regulations that may be subject to change.
Set Aside Some Cash
While retirement savings accounts have clear tax benefits, if there is one thing that time has taught us, it is that stock market crashes are bound to happen. That is why the smart investor doesn’t put all of his eggs in one basket — or all of his money into stock-based retirement accounts. Diversify your investments, and make sure that you have sufficient cash on hand so that you can weather stormy markets without having to sell off your assets. Shortly before you plan to retire, divert your retirement account options into different cash investment options such as money market funds or certificates of deposit. These options will allow you to reap modest investment earnings without the risk of the stock market.
Diversity Your Retirement Accounts
If possible, you should consider setting up both a 401(k) and a Roth Individual Retirement Account (IRA) or 401(k). 401(k) plans grow on a tax-deferred basis, so that you don’t pay taxes on contributions or earnings, but you do pay taxes for the distributions. Roth accounts work the opposite way: you pay tax on contributions, but not on earnings or distributions. Because you don’t know what your income tax bracket will be when you retire, it is a good idea to have some options for how you can access money. If your income tax rate is high at retirement, you could rely more heavily on your Roth accounts for tax-free withdrawals until your rate lowers.
Dot Your I’s and Cross Your T’s
When it comes to your insurance and retirement accounts, make sure that you have all of your paperwork in order before you retire — which includes designating beneficiaries. When you die, if beneficiaries are not named, then the accounts will go through the probate process — which can be both costly and time-consuming. If you have a named beneficiary for your life insurance and retirement accounts, then you can avoid the process by having the money go directly to the person you designate.
Pay Off Your Debt
While this may be easier said than done, paying your debts down or off will help you save for retirement. This means paying of credit cards, student loans and even your mortgage before you enter your retirement. Paying off debt lets you push more money into retirement accounts — so that you can retire sooner and live better in retirement. Be sure that you are paying as much as possible on your debt to avoid compromising your retirement.
Save, Save, Save
In today’s political landscape, it’s impossible to know what sort of benefits will be available for you at retirement. This makes it all the more important to save as much as possible for your retirement now — so that you won’t be depending on something that may not exist by the time that you are retired. Increase that amount that you save each year to help reach your goal — and keep your eyes focused on the ultimate prize of a great retirement.