Retirement Planning — A Basic Guide

Retirement planning is an activity that can significantly affect the quality of our life once we stop going to work. However, there is a huge number of people who don’t pay much attention to this activity and usually once they notice their mistake it is too late. The fact is that it is never too early to get involved in retirement planning. If this type of planning is performed in the right way, you can expect to have a good and stress-free life once your reach certain age. Whilst it is true that the preparation process requires certain amount of time and effort on your behalf, it is also true that the benefits that you will get from retirement planning will definitely make this task worth it. Now let’s take a closer look at the things that you need to take into consideration.

To start with, you will have to understand your personal retirement requirements and needs. According to many experienced financial professionals, saving about 15 percent of your yearly income for retirement should be enough for peaceful old age. Of course, you should start saving few years after you start working (in case you start working in your 20s). In case you are a little bit older and you have not started making this plan, you can use some of the retirement calculators found on the Internet or some special software solutions that can help you find out how much you need to save in order to achieve your goal. It is good to point out that according to the same experts you will need to save an amount which is about 70% of the income you’ve created before retirement in case you want to keep living in the same way like before.

Furthermore, it is highly recommended to clear your debts as soon as possible. If you have a chance, pay off your car loans, home loans or credit cards as soon as possible. If you have a mortgage make plans for elimination of this mortgage faster than before. If you have enough cash use this cash to buy the things you need, don’t rely on loans. If you don’t have any debts when you retire, these days will be much more pleasant.

Another good idea is to create a solid savings plan. It doesn’t really matter where you allocate your money (IRA, company pension plan or 401k), what it matters is to calculate a certain amount of money that will be allocated in your personal retirement investment. This is a good way to avoid spending the money intended for your retirement on something else.

Finally, you can also use the Internet and other sources to learn more about the investment principles of retirement planning. You should be prepared to calculate your new worth at any moment or to design a regular saving plan.

As you can see, this area is complex and it will take a lot of time to learn the basic principles of retirement planning. That’s why it is a good idea to ask some professional financial planners or tax accountants for help.

Jason Matthews President C.E.O. Matthews Financial & Insurance Solutions 510.229.7608 @mfisguru

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