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Retirement Planning - Which Retirement Plan Is
Best for You?

Retirement Planning

I was 20 when my father started telling me to think about retirement planning.

At that point, all I could think about was how to make a lot of money, and then of course, spend it.

A few years later, however, I did actually start making retirement plans.

What I discovered was that, while there is no such thing as the “best retirement plan,” there are certainly plenty of options available.

Let’s face it - like it or not, you do have to be ready to retire if you plan to be financially comfortable. Which options you choose depends on your age and income. I would suggest not worrying about a lot of complex details about Roth IRA vs. traditional IRA or IRA vs. 401(k) and the like. Instead, spend some time taking stock of your current situation based on how old you are if your goal is to make your savings last you a long time. Now you can either read on to find out which retirement planning options are available, or jump to the parts that relate to your age. Here we go:

You are between 20 and 30 years old

Retirement is probably the furthest thing from your mind right now – like it was for me – but, believe me, it is time to begin retirement planning. Your best friend at this point is “time.” Treat it as an asset. You have the luxury of selecting long-term investments that lock up your principal and keep you from withdrawing it. When I was 20, here’s what was suggested to me: a traditional IRA, or Individual Retirement Account, because it would help me save tax and maintain a good growth rate over time.  A 401(k) is also good now as a savings plan where deductions are made from your paycheck, saving for your future.

You are between 30 and 40 years old

By the time I reached this age, I was pretty much approaching financial stability and thought it was a good time to evaluate my savings. If you are also probably actively participating in a 401(k) plan, think about increasing your contributions. I did, and I was pleasantly surprised to see a substantial rise even with an increase of one percent. But make this increase gradual. IRAs are also a good choice because the funds will continue to grow until you retire. It is a good idea to look into the stock market as a part of your retirement planning at this point because you have the time to bounce back in case things don’t work out.

You are between 40 and 50 years old

I remember thinking – heck, I’ve got a good twenty years to go to build my savings. If you haven’t started planning for your retirement yet, it is not too late to start. Rather than dip into your 401(k) or IRA, assess your assets. You’ll need to do some private retirement planning because you cannot afford to depend on what your employer provides.  If you do have an investment portfolio, reapportion your stock investments to 80 percent and reinvest the other 20 percent in safer options like bonds.

You are between 50 and 60 years old

If at this stage, you’re still worried that you haven’t gotten around to making serious retirement plans, don’t fret - yet.  Think about your retirement goals and decide how much you need in savings to meet these goals. Sit down with your assets, your expenses and your current debt situation and get in touch with an experienced financial planner. Chances are you may need to part with a higher portion of your paycheck than before. With planning, you may still be comfortable when you retire, or at the very worst, retire later – by continuing to work.

To live the lifestyle you dream of, the earlier you begin to think about retirement plans, the better.

The good news, and I can tell you this through personal experience is that retirement investment does not take a whole lot of money.

With some serious planning, you too can ensure that when you retire, you will be comfortably well-off.

 

 



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