Ah, retirement. Everybody can’t wait to get there and the sooner the better. But how are you going to spend your retirement? Do you have a plan? Keep in mind that retirement planning begins well before you retire. And the sooner you begin planning your retirement, the better. Your target number, or the amount of money you need to retire comfortably, varies from person to person but there are some general rules you can go by when deciding how much you need to save.
Often, you will see the $1 million number tossed around. It is a big number and a popular one. Many people think that is exactly what they need to retire comfortably. Many financial professionals use an 80% rule, or the idea that you will need 80% of your income are retirement to be comfortable. That means that if you made $100,000 per year, you would need to save $80,000 per year for about 20 years, or $1.6 million to meet that goal. Another train of thought is that most retirees aren’t saving near enough to meet those figures and will have to adjust their lifestyle to accommodate what they have.
Retirement is a significant reality for each person. Many young people think retirement is so far away, they give it little thought. However, it is vital to properly plan for your retirement if you hope to maintain your financial independence and enjoy a comfortable standard of living when you are no longer cashing traditional paychecks.
However you decide to calculate your retirement savings needs, you will want to start as early as you can.
What Is Retirement Planning?
Retirement planning is the method of establishing retirement income goals and the steps needed to achieve those goals. Retirement planning includes recognizing sources of income, estimating expenses, and putting into play a savings program that prudently manages your assets. Future cash flows are estimated to determine if the retirement income goal will be achieved.
An easier way to put it is that retirement planning is the planning you do to make sure you are prepared to live after your career ends – and not just having enough to pay the bills but being able to have a high-quality existence. Non-financial aspects could be how you spend your new free time, where you decide to call home, and when to stop working completely. A proper retirement approach will take of this into consideration.
As you decide to plan for retirement, your plans and actions could change over the course of your working life. Early in your career, retirement planning is about saving. Once you get a bit older and start experiencing the middle of your career, you might start thinking of setting specific goals and taking the proper steps needed to achieve them. Once you reach retirement, your focus changes from accumulation to distribution. You are no longer paying in, but you are now paying out. Do you have enough?
Why Is Retirement Planning Important?
Retirement planning is yet another thing that many people will eventually get around to doing. Retirement is something that’s fairly easy to put off and worry about later, especially when you are young. After all, everything will work out in the end, right?
Sure it will. Until it doesn’t. Life is fickle and tends to take many paths to reach the retirement destination. If you’re not prepared and don’t have a plan, what will you do?
Therein lies the biggest issue with the “wait and see” strategy — often life doesn’t work out the way you hoped. And, if it happens any other way than you’ve hoped, you might put you and your family in a difficult situation. That is why planning for retirement is one of the most important things you can do.
Like most people, you probably aren’t planning to work until you draw your last breath. Odds are, you have dreamed about spending your golden years drinking cocktails in a tropical paradise, wrapped in a blanket with a mug of hot chocolate in a cozy mountain retreat, or jet-setting across the globe. These are wonderful dreams but, be advised, it requires careful financial planning to make them happen.
Retirement planning includes a lot more than simply how much you will save and how much you need. It should consider your entire financial picture.
It’s extremely important that you begin planning for retirement early. If you start as soon as possible, you’ll put yourself in the best situation you can. Building your desired nest egg could take decades and, depending on your income, you’ll want as much in your retirement account as you can possibly have. By beginning your investment and retirement plan early on, your money will grow over time, leaving you with enough to realize your retirement goals.
The good news is it is never too early to plan for your life after you’ve finished working. It’s also never too late to start. Don’t think that just because you’re in your 40’s or 50’s – or even later in life – that you cannot take certain steps to be better prepared for the future.
Now that you realize the importance in retirement planning, you can start developing your retirement plan today.
Who Can Benefit From Retirement Planning Services?
You and everyone you care about can benefit from retirement planning services. Your dream retirement might involve giving back to your family. If you have a healthy amount of money you can dip into, you can be the parent or grandparent that offers your family comfort and security, like leaving an inheritance that can help your loved ones get a head start in life.
It can also make it easier for you to be an integral part of your family. For big events, like weddings and graduations, you will have the means to travel when and where is necessary. It is certain to mean a lot to your family that they can depend on you when it matters.
Again, your retirement fund also doesn’t even have to end with you. If you’ve planned carefully and have a healthy pool of funds tucked away, you may have a nice gift to give your children or grandchildren when your time comes.
On the other hand, consider your future with your family if you don’t properly plan for retirement. It could then become your children’s responsibility to take care of you. In your retirement, you shouldn’t be dependent on anyone, let alone your own family.
Having a firm plan in place will make sure you don’t become a financial burden on those you love the most. It is important to be in a position to help out a family member’s financial situation, and not make things worse.
Get Started With Your Retirement Planning Today
Those embarking early on their retirement journey may not have much free money to invest, but they do have time to let investments mature, which is a vital and valuable tool.
The reason for this is the principle of compound interest, which allows interest to earn interest. So, in turn, the more time you have means the more interest you can earn. Even if you only saved $50 per month, it will be worth significantly more if you begin investing at 25 instead of 45 – or 45 instead of 65. If you’re starting later than you would like, you can always try to invest more to make up for the lost time.
When your finances are not in the best shape and even making ends meet is difficult, it might not seem like you have any money to set aside for retirement. While we understand that everyone’s financial circumstances are different, here at HeartStone Advisors, we believe you do have enough to save for retirement – And we’d like to show you how.
With over sixty years in the financial services industry, we’ve helped clients in all financial situations plan for retirement. We will take great care to help you reach the goals you desire so you can have the retirement you deserve. Please call us today.