Retirement is a season of life most people look forward to, but few make the proper plans to retire well. Many put off planning for their retirement, leaving themselves insufficient time to save enough money to afford the retirement of their dreams.
According to the Employee Benefit Research Institute’s 2017 Retirement Confidence Survey, only 60 percent of American workers feel they will have enough money for a comfortable retirement, and workers who have a retirement plan are much more likely to feel confident about affording retirement.
Planning for retirement early in a career is important to a worker’s financial wellness once he or she reaches retirement age. Not saving for retirement early enough could mean working a few extra years before retiring or returning to the workforce during retirement to pay for a variety of expenses, including health care costs. Whether you are well into your career or just starting out, creating the right retirement plan for your financial situation is possible and will keep you on track for retirement.
Retirement looks different for everyone, and so does every retirement plan. The first step to planning for retirement is to decide what it looks like to you. Consider when and where you would like to retire, how you would like to spend your time and what kind of lifestyle you would like to maintain during retirement. Knowing what you want out of retirement will help you estimate the amount you need to save. You can create a financial plan for your retirement using that estimate as a goal.
When creating a retirement plan, there are a few things to consider. Plans should account for any taxes and fees that will be taken out upon retirement. Retirement plans should also include any other potential sources of income, such as Social Security benefits, as well as potential expenses, such as health care costs.
Saving enough money for retirement takes a bit of planning and plenty of time and diligence. The best way to save is by putting money into retirement accounts. Most employers offer some savings options, like 401(k)s, along with contribution matching programs. Contributing to a 401(k) or a 403(b) through an employer that matches employee contributions is a great way to double your retirement savings.
If you do not have 401(k)s available through your employer, are self-employed or can afford to save more for retirement, you might want to save money through an alternative savings plan. These plans include Individual Retirement Accounts, commonly referred to as IRAs, and traditional investment accounts. An IRA is a retirement savings account that offers certain tax advantages. There are several types of IRAs to choose from, each functioning differently and offering various benefits. Some of the different types of IRAs to choose from are:
Workers rely on their monthly income to cover their living expenses throughout their careers. Retirees have expenses too and need an income. There are several options available in terms of retirement income, including pensions and Social Security benefits for those who are eligible. Those who have retirement savings accounts, like 401(k)s and IRAs, can pull the funds from those accounts when they retire and create their own pension through an immediate annuity. An immediate annuity is a financial tool that guarantees the purchaser a regular income. Unlike a regular annuity, it is purchased with a lump sum of money and begins to pay out immediately.
Some retirees may also be eligible for pensions through their employer or through the government. While some corporations may offer pension benefits, all government jobs, including state and federal positions, offer pensions to all employees. The government also offers pensions through Social Security benefits. Some choose to delay their Social Security benefits in order to maximize the income provided through that pension. The later a retiree begins receiving Social Security benefits, the larger the amount that is paid out to him or her.
Making the most of retirement requires some planning in advance. Those who wish to retire well often save and budget, both while they are in the workforce and throughout retirement. Making sure that enough money has been saved enables retirees to enjoy their retirement without financial stress, regardless of where they choose to spend it.
While many choose to stay stateside, some choose to spend their retirement abroad. Exploring and adapting to new cultures comfortably is possible for those who choose to retire in a foreign country. There are American expatriate communities all over the world that retirees can join when transitioning to living abroad. Those who want to retire in a foreign country should consider the following: