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prepare for retirement and plan for success

6 Steps to Prepare for Retirement, Plan for Success When You Retire



Have you prepared for retirement? Retirement plans can't be postponed, if you want to have enough money to retire. The sooner you plan for retirement, the better. Listen to what a financial retirement planner would tell you, if you want to retire successfully. These 6 steps for successful retirement planning are financial strategies to prepare you for a comfortable retirement. They will help you handle your day-to-day-finances, potentially reduce your taxes and manage your investments.



What is your current financial situation? Whether you are just barely getting by or living in the lap of luxury, you need to develop a personalized plan that may help you pursue your retirement goals. Here's what a financial planner would tell you to do, if you want enought money for a carefree retirement.

How much money will you need for retirement? Only you can truly answer that question. Start with your current monthly budget. Subtract your employment income, and add in the monthly Social Security payments and pension plan benefits you expect to receive. If your house will be paid for when you reach retirement and your kids are grown and on their own, subtract these expenses. It's probably not enough to live on, is it? Most people have to face a lower standard of living when they retire. Retirement planning also motivates you to get your financial house in order. It's never too early to start a retirement plan.
  1. Reduce credit card debt, mortgage loan and other loan obligations.
  2. Avoid unnecessary and impulsive spending.
  3. Curb your expectations.

Financial strategies for successful retirement focus on important financial issues and concerns you may face today and in the future. Proper planning will help you prepare for a comfortable retirement. Unfortunately, many people find that in their retirement years they must continue working at a job, at least part-time, as long as they are able. A financial planning consultant will advise you about the choices you can make as you plan for retirement. Here are 6 steps or financial strategies for a successful retirement plan.
  1. Step #1 to Prepare for Retirement. Naturally, the most important part of your retirement plan is to save all you can, even more than you expect to need. Everyone is concerned that they will run out of money in their retirement years. Social Security benefits will not be enough to support you in a comfortable lifestyle when you retire.

  2. Step #2 to Prepare for Retirement. The second part of the retirement plan is to make your savings work hard for you, by earning great investment returns and avoiding income taxes on your savings. Many people include a Roth IRA as their tax-sheltered retirement plan. Other tax-sheltered retirement vehicles are a traditional IRA and 401K accounts from your employers.

  3. Step #3 to Prepare for Retirement. The third part of the plan is to start early, so that your retirement savings will grow and grow as earnings compound over time. A chart of how compound interest zooms up over the years will really wow you and motivate you to get your retirement plan started. Suppose your savings will earn 8% each year. If you save $100 a month, your retirement plan will grow to $18,295 in 10 years, $58,902 in 20 years and $349,101 over 40 years.

    retirement planning compound interest growth chart
    Your Retirement Plan Grows Faster When Compounded Over Time


  4. Step #4 to Prepare for Retirement. The fourth part of the retirement plan is to decide how to invest your retirement savings. You should consider the relative merits of interest payments, stock dividends, and capital appreciation. With your savings, you can own stocks, bonds, ETFs, mutual funds, index funds, bank savings accounts, Certificates of Deposit and government notes and bonds. There are other alternatives like real estate, gold and silver, art, and any asset that you expect to increase in value over time. Whatever investments you choose, you have three objectives for success: to get the best rate of return, to minimize risk and to have liquidity when you want to sell. A financial planning consultant will recommend that for safety you diversity your portfolio with several types of investments, and a variety of stocks. Balancing your portfolio regularly is also part of his or her advice.

  5. Step #5 to Prepare for Retirement. The fifth part of your retirement plan is to consider the risks you face.
    1. Inflation is the risk that your savings dollars will purchase less in the future. To minimize this risk, you can choose investments that will appreciate as inflation increases.
    2. Many retirees face the risk that they will outlive their money. Annuity insurance as part of a retirement plan can help relieve their worries.
    3. Health care during your retirement is another major concern. Health care costs are rising, while most employer pension plans no longer include health care coverage, and Medicare cannot cover your needs adequately.
    4. Long-term nursing care is another part of retirement that can quickly consume your savings. You can meet this risk with an insurance plan that covers nursing care.
    5. A living will guarantees that your medical care providers will respect your last wishes.

  6. Step #6 to Prepare for Retirement. The final part of your retirement plan is to provide for your loved ones, your spouse and family, when you are no longer around to take care of them. This is when life insurance is valuable. Naturally, your retirement plan includes a Last Will and Testament to distribute your assets according to your wishes. Estate tax planning is crucial to protect your assets from death taxes as much as possible, and to provide cash and liquid assets that can be used to pay the estate taxes.
I wish you much success in life.
The Retirement Coach

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