Retirement Financial Planning–How Can It Help You Set Your Retirement Date?
Trying to set a time when you can afford to retire is like putting together pieces of a financial jigsaw puzzle. There are a number of calculations you can make and a few best guesses as well. To say there are many variables for each person is certainly an understatement, however there are some specific questions you will need to answer for yourself and you should be able to put together a solid retirement financial planning scenario that can give you the answers you are looking for. Check out the link at the bottom of this post for a program that can help you meet your investment goals.
I have covered a few of these things in previous articles but I am going to make an attempt to consolidate the whole process into a fairly simple formula that anyone can follow. Here goes.
One of the first things you should define if you have thought about it is to pick the time you want to retire. This is not a necessity for everyone, since someone just starting off in their career may think talking about retirement is at the lowest end of their priorities. Those of you within 20 years of that event should define it at least within a 3 year window. For those with much longer periods of time, yes even including you young people just getting started, should at least pick an age that you might think would work for you and base your calculations around that. Everyone should have some kind of plan for retirement so they can create a saving and investment plan to reach their goals.
Let’s first, estimate how much you’ll spend in retirement. You will need to look at current expenditures and determine if any of them can get eliminated in retirement. You can make allowances for any grandiose plans you may be thinking about and adjust your expenses accordingly. Next you will look at your current income. The popular thought is you will need a minimum of 70-80% of that to maintain your lifestyle. Then you need to consider the income you’ll collect in retirement from pensions, (most companies have phased out pension plans) and Social Security. Next you’ll calculate an amount you can afford to draw from your personal savings such as 401(k)s, IRAs, or other sources based on living at least 20-30 years into retirement. If you want to retire really young, you will have to add those additional years into your plan, and allow for the fact that you may not be old enough at the time to draw from social security or the pension plan for the first few years.
The best tool to help you with these calculations is one of many of the online retirement calculators. You can plug in the information from pensions, social security, retirement investment accounts, estimated living expenses, and other numbers to help you with your retirement financial planning project.
After you assemble all these pieces of information and crunch a few of the numbers, you can assess your prospect for meeting your goals and start to more tightly focus on a more specific time to call it quits and enjoy your golden years.
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Retirement financial planning can be a little work, but the rewards will pay off for a lifetime.
Trader Bill
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