Retirement Planning Now Rather Than Later
By Anonymous
There are about 78 million baby boomers for whom retirement age is just around the corner. As this group ages, are they preparing for retirement? Their parents were able to depend on pension funds and social security, but these have become unpredictable in recent years.
For example, in 2006 there were 3.3 workers for each social security recipient. By 2031, when all living boomers will be over age 65, it is projected there will only be 2.1 workers for each person receiving social security.
The time for retirement planning is now. Since this large segment of the U.S. population cannot count on 2.1 workers supporting each of them through their retirement years, they are going to have to be better prepared than their parents. Retirement financial planning needs to be given major consideration by everyone who has finished up their schooling and is working. But the closer you get to retirement age the more important retirement planning becomes.
How do you get started? If you are employed, then sign up for your company's 401k plan. Put the maximum allowed into it. Even if you are hoping to retire in the next five years, it will help. If you are self-employed put money into a Keogh retirement plan. This is similar to a 401k in that you do not pay taxes on the money you invest until you start taking it out.
Whether you invest in a 401k or a Keogh retirement account, it is important to have multiple retirement accounts for security. Most people are eligible for a Roth IRA, which is another account that is tax deferred. Find out from your financial institution or your accountant how much you are allowed to put in each year.
There are other things you can do besides setting aside money to live on. Other retirement financial planning would include things like reducing or completely eliminating outstanding debt before you retire. If at all possible have all credit card debt, mortgages, and any other debt paid off. If you are struggling financially now, you might wonder where the money is going to come from to put any money into retirement accounts and to pay off any outstanding debts. If so, it is time to set up a budget.
After you write down everything that you are spending money on each month, figure out where you can reduce your spending. If you are still short, it might be time to get a second job. That doesn't necessarily mean working as a janitor on weekends. Many people are earning extra money online, such as with eBay.
By setting aside money for retirement now, paying off all outstanding debt, and learning how to budget your money, you will be far ahead of most baby boomers as they approach their retirement years. You will be retiring younger, living better, enjoying the freedom that financial planning brings, and might even have a nice sum to leave your children. Those are the fantastic benefits of retirement financial planning years before you actually retire.
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