|
Retirement is supposed to be the time for you to enjoy the fruits of a lifetime of working. However, it has proven less than that for many people. Many have lived below a comfortable lifestyle during this period and some have become dependent on family members for their financial survival.
Retirement is expensive. According to recent estimates, you require at least 70% of your income before you retired if you want to keep your current living standards. That means you will need to make just short of the same amount month-to-month as you used to. How could you when you’re supposed to have retired from the workforce?Understanding Your Benefits If you’re looking at retiring comfortably in the near future, it makes sense to begin securing it now. Find out how to fill your financial needs and plan for it early. 1. Social Security You will likely be entitled to Social Security benefits upon retirement that can help fill the gap in earnings. Social security can provide up to around 40% of your pre-retirement income – not great but it should provide some value. Call them as early as now to get a free Personal Earnings and Benefit Estimate Statement. No need to wait till the day comes before sorting out your Social Security entitlements. 2. Corporate Pension or Retirement Benefit Plan If you have chosen jobs wisely, your employer may have set you up with a retirement pension or benefit plan. If you do, make sure to check what the benefit will be worth come that day you hang up your work boots. If you are changing jobs, make sure to find out what will happen to that benefit as well. You may be able to carry it over to your next employer or cash out early. Likewise, check if you are entitled to any benefits from your spouse’s pension plan with her employers. If your employer doesn’t offer one, it may make sense to either move workplaces or gather a few co-workers and suggest one. If you currently have a retirement plan then decide to change jobs, you can either roll over your retirement savings into an IRA or into your new employer’s equivalent benefit. 3. Tax-Sheltered Savings Plan This is something you should have been doing for a long time. If your employer offers a 401(k) or similar tax-sheltered savings plan, take advantage of it and put in as much as you can. If you haven’t begun yet, start as soon as possible. Doing so will bring in so much benefits in terms of lowered taxes and compounding interest that it just might see you through many of your financial needs post-retirement. 4. Individual Retirement Account (IRA) You can open and put aside money to an Individual Retirement Account. Under certain provisions, you might qualify to declare your contributions to this fund as tax deductions. Getting Ready Regardless of your current situation, there is no better moment to prepare for retirement than now. If you’ve lived majority of your life ignoring your finances, it’s probably time to begin paying attention. Retiring comfortably is not impossible but it will not take care of itself either. Know your options and make the most of them – you deserve it.
|
