How To Retiring Comfortably

There are a couple of general rules when a person is planning for retirement. The first one being, you would want to have just about enough money in order to live a sufficiently comfortable lifestyle and the second being that you simply do not want to drain your bank account dry.

These are two very essential and simple rules that will determine the course of your lifestyle when you retire although some people are not as well off as they should be when retirement age comes. It’s probably because they spent most of their income on previous things which seemed to be unnecessary or it may be because they did not save enough. Here are some tips on how to prepare for retiring contentedly:

When determining your potential retirement income, always take into account your investments and other possible sources of income. This may include several other sources of income such as property which you can rent to other people or pension plans, part-time employment as well as social security. This allows you to have a rough estimate on how and where you will be able to get your future retirement contributions and income. This will also help you ease out the recurring expenses such as house bills or other expenses such as medical bills.

Save as much as close to 15 percent of your annual income. Although it is quite a large sum of money to some people, it is still a rough estimate and it could be better if you would consider within that 15% the different investments that you put as well as the money that your employer might add to your contributions or the money that you make in your IRAs. Eventually, if one considers saving up this much money, it will strategically produce approximately 50 percent of one’s current salary.

If a person’s saving strategy is still slow it would be ideal of them to add more to their annual contributions above 15 percent and contemplate the idea of putting cash gifts, inheritance money, annual raises as well as employment bonuses into the retirement investments rather than spending these additional bonuses.

Seek help from a financial planner to discuss ways to avoid or defer taxes by investing in tax-deferred allocations. This will definitely benefit you in the long run because you save more by going around taxes.

Another practical solution is if you are not absolutely satisfied with how your retirement picture is looking, then you could delay your retirement a few more years.

One obvious move is if your employer offers retirement plans like a SEP-IRA or 401(k), then take advantage of these and maximize your employer’s matching funds in order to get more out of these plans.

These are just some of the suggestions that may help a person ease his or her way into retirement. It is up to the individual to determine if he or she will be prudent enough to save more, spend less and invest much more wisely. If done correctly, retirement will be something to look forward to instead of something to dread.

 

Posted by Ardent Editor on Feb 7 2007 in Retirement 101

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