Retirement Planning - Your
Financial Future is in Your Hands
by Kelly Gillis
Retirement planning is for some
something they don't think
about until they're past time to make the most of the
opportunities available when they were younger. Retirement
planners agree that in order to enjoy the same lifestyle in
retirement that you do now you will need 70-90% of your
pre-retirement income. The best part is that it's really never
too late to start, or, as the old saying goes, "better late
than never". Here are some ideas to help you with successful
retirement planning at any age.
Most retirement planning specialists will tell you that one of
the first keys to successful retirement planning is starting
early. It's simple, the earlier you start saving for your
retirement the more money you will have due to compounding of
dividends and interest. The difference can be startling. If you
started saving at the age of 40, you'd have to save over three
times the amount of money that you would have if you had
started at the age of 25 to have the same amount of money at
Experts agree that you will need three main sources of
retirement income, your Social Security, your pension, and your
personal savings, (profit sharing, IRA's, or 403 (b) plans). Max
out your employer sponsored retirement plans. These are a great
way to save for retirement. Along with the immediate tax
savings these offer, many employers offer incentives such as
matching a percentage of contributions. IRA's (individual
retirement accounts) are also excellent ways to save for your
retirement. This money is put away pre-tax. When you withdraw
this money at retirement time you are in a lower tax bracket.
The downside of IRA's is that you cannot use this money before
a certain age without significant tax penalties.
Due to an increased life expectancy you will need to consider
safe ways to continue to build your wealth even after you
retire. Money market funds are a good way to do this and have
little risk of going down in value. Most financial planners
suggest having six months of normal expense money set aside
(this is for any age) in case of emergency.
Some seniors opt for what is called a reverse mortgage. A
reverse mortgage can be a large part of retirement planning.
This is where a homeowner, 62 or over, can convert part of the
equity in their home to tax-free income without having to give
up title or sell their home. The amount of a reverse mortgage
is based on many factors, your age, appraised home value,
current interest rate. The money can be paid to the homeowner
as a lump sum, in fixed monthly payments or as a line of
credit. Mandatory credit counseling is required before applying
for a reverse mortgage.
Some use annuities to help cushion retirement. Annuities are
contracts issued by life insurance companies that guaranteed
periodic payments for life. You buy deferred annuities
throughout your working years. The funds accumulate tax
There are many avenues available to help you have an enjoyable
retirement, one that is free of money worries and woes. Take
you time, read and educate yourself on them before you choose
the one, or ones, suited for you.
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