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Retirement Financial Planning And Retirement Ideas
Too soon we get old, and too late we get smart is the old Yiddish proverb. This applies to most people as they do retirement planning. retirement ideas range from imagining yourself living in a life of luxury, playing golf, taking 9 month vacations, and enjoying life, down to living in a retirement community where your basic needs are taken care of. Failing to plan for your retirement can have very negative consequences on the quality of your retired life.
To do proper retirement financial planning, you should start early – that's the "too late smart" part of the proverb. You're getting older every day – are you getting smarter? Fortunately, there are retirement books that can help you with this. One of the most important is "401(k) Basics" by Motley Fool publishing. It will steer you into how to make the most of a company 401(k) plan, while taking an unsentimental retirement view – telling you that there is no fast road to riches, only steady, regular savings and investing will help ensure you against retirement losses.
Your retirement benefits should contain a mix of growth funds early on, wealth preservation funds and income generation tools as you age – this can be found online through a number of retirement calculators, and will help you plan the day when you can send your company your retirement letters and say "I'll be on the golf course!" Most retirement calculators are driven by
an investing
rule called the Rule of 72 – take 72 and divide it by your rate of
return in points (for example, getting 6% on a savings account or CD)
and that will tell you how many years it takes for your investment
to double. In this case, 72 divided by 6 is 12, meaning that sitting
an investment down in a 6% account means it will double in 12 years.
Remember
that slow and steady contributions win the day; you can't rush this
later in life. Start early, invest everything you can afford to, and
know that your money is working for you in the long term. If you're
eligible for a 401(k) program, you should take it – it benefits you
in multiple ways, from employee matching (which doubles your investment)
to being take out of your paycheck before taxes (which is fundamentally
giving you a 20-35% increase in the net investment from doing it in
post-tax income) to tax deferral on the interest it accrues. A 401(k)
is by far and away the best retirement investment vehicle possible.
One thing you should not count
on is Social Security; due to changing demographics, we're going to be disbursing
more from Social Security than it takes in in about 5 to 10 years, and the fund
will literally run out at the current rate of contributions in thirty years.
Presume that you're on your own and plan accordingly.
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