Retirement is a tricky thing. One day you feel good because you will relax and finally, one day you will worry about your financial situation. But people who plan to retire in advance may have little or no fear.
A retirement plan is an ongoing process and you must try to anticipate things. Although no one can predict everything, trying to get close enough will do some better.
Many people are afraid of retirement because they worry about what happens when they reduce their income. However, retirement planning is not a difficult science, and following these seven steps may help you ensure future security.
1. Retirement plan - assess your financial situation
First, count all current assets, liabilities, income and expenses. You can sit with a retirement planner and estimate your responsibilities and costs. When you retire, some fees may remain the same, such as groceries and insurance.
However, some fees may increase, such as travel expenses, vacation expenses, and reduced spending on adult children. Pensions and social security will also pay some fees. Highlight the troubles and problems that bother you at night and discuss with your planners.
2. Calculate the value of assets and liabilities
Here are some tips on how to calculate the current asset value.
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Make a note of the current amount in each account where you save cash and liquidity. These include checks, savings and money market accounts, and proof of deposit.
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If you have a deposit, calculate and determine the current value or call the bank to find the current value.
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Call your agent to find out the cost of your entire life policy.
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Invest in stocks, bonds or mutual funds and check the value of the financial website or your last statement.
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Use the current value of your home and other real status.
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List the current value of your pension, IRA or other retirement plan. If you decide to cash them today, try to know the value of it.
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Also remember other assets such as commercial and rental properties.
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The balance of your home mortgage is a monthly liability.
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Also remember all other mortgage or home equity loans.
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Record credit card, installment, loan and investment account balances.
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List all current and excess bills you owe. These include utilities, doctors, dentists, telephones, water, gas, property taxes, etc.
3. Know what you want
We all really want to confuse ourselves so much. After you retire, list the things you think must be in line with your lifestyle. Think about everything you might look small so you can be prepared.
Do you know how much it will cost to retire and have a comfortable life?
Well, research shows that you need to replace 70-90% of your pre-retirement income. It can help you estimate your goals based on current revenue. Although this is a rough estimate, keep this in mind to get you on the right track. Factors such as maintaining leisure habits, medical expenses, and housing rents will have a significant impact on the amount you need to save.
If you can save the right amount of money for retirement, then you can also choose the life you want. A proper retirement plan allows you to overcome any obstacles and restrictions and increase your leisure time during the golden retirement period. You may even have enough to leave to the next generation. Don't be afraid to aim high!
4. Cash flow plan
The present value is important to your retirement plan. This is the amount you need to plan and save the future in your account today. Many people work with their financial advisors or retirement planners and make personal retirement accounts for retirement. You can plan before and after retirement.
Pre-retirement plan
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budget
It is almost impossible to start any retirement plan without a budget. Your budget is an important part of your pre-retirement and retirement cash flow plans. This is an essential analysis and one must determine how much cash is needed to maintain the lifestyle of you and your family.
Once your budget is in place, it should be reviewed annually to determine if additions and reductions are changing the program budget or if any other adjustments are needed. The budget will also help protect your long-term and retirement savings.
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Emergency fund
Let us face the reality, unexpected financial problems will occur at any time, and it is not easy to avoid. So if we have some savings that can help you meet the inevitable needs, then this is always a good idea.
Your contingency fund should be put on hold in a fluid manner because you never know the time or situation you might need. The total amount needs to be determined by you and your family and should be at your comfort level. Some people may agree to have $10,000 or $20,000, while others want to invest a higher amount for the contingency fund.
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Risk Management
One area that is often overlooked in retirement plans is risk management. People usually focus on saving for retirement. However, they forgot to put risk management in their minds. Risk management includes auto insurance, home insurance, short-term and long-term disability, and health insurance. You need to develop policies for these and should monitor, review and update as needed.
Plan during retirement
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budget
Your plan should start with the budget during retirement. Your income will change after retirement, so monitoring your entire retirement cash flow is critical.
A post-retirement budget means not only checking cash flow. In fact, it also involves analyzing all your expenses throughout the year. It allows you to identify where you can use other or cheaper alternatives, or how to plan for large expenses.
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tax
Tax planning is a huge hardship for some retirees. It requires a lot of planning to analyze the source of funding. It allows you to maintain your lifestyle, so you need to remember your tax consequences.
Different types of accounts have different types of tax consequences when they are funded or withdrawn. Retirement savings or qualifying accounts are taxed as ordinary income levels. Non-qualified accounts are taxed at the level of capital gains.
When specific funds are needed to maintain a retirement lifestyle, the tax consequences of an account that finances retirement must be maintained.
Taxes should not be the only consideration when making a retirement plan. Instead, it should be combined with other aspects of your overall financial planning.
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Estate planning
While the necessary estate planning is a key component of retirement, post-retirement planning has a more important role in managing real estate. You must identify the issues that you and your family want to solve.
It is vital that the approach to estate planning should be similar to your approach to risk management. Your estate plan should be reviewed and updated regularly.
5. Investment or savings
If you start to be late, there is no problem at all. The key to expecting success is positive prospects and understanding, and it's always better than never to start!
If you are 55 years old, the government can save additional costs so you can get more help. Sometimes the savings account and employee pension are not likely to achieve your goals. That's when you explore investment products.
If you plan to improve your standard of living and maintain a financial position for a long time, it is always good to invest in your side. There are many different ways to save money, but the IRA account has proven to be the best. If you don't know yet, search the powerful internet for guidance.
Creating a diverse portfolio of savings accounts, investments, stocks, bonds, property and insurance will help your interests.
6. Develop strategies to maximize your social security income
Social security may still be an important part of your retirement plan, so maximizing this benefit is critical.
In order to maximize the benefits of social security, you need to sit down with retirement planners to develop an effective social security strategy. The age at which you decide to withdraw funds will also have an impact on your lifetime savings. You can receive it from the age of 62. In addition, the more you wait, the more you will pay. If you wait until the age of 70, your payment will increase to 77%.
Another important thing you should be aware of is whether you are eligible for more than just your own retirement benefits! If you are married, divorced or widowed, you may also be eligible to apply for a "spouse" or even "survivor" benefit. Although, these are based on your records with your spouse, whether they are dead or alive.
Remember not to apply for two or more benefits at a time. If you apply at the same time, you may lose one of them. Develop a strategy to first declare the smaller one and then the larger one.
Social Security uses the best 35 years of your career to calculate your monthly income. If your working time is less than 35 years, you should continue to work. Because this can also help you reduce some low income years.
7. Check and repeat
The most important thing to remember when doing a retirement plan is to focus on your savings. Need to be updated and changed as needed. Check your retirement plan every year. Nothing is immutable, and let you live a happy life through a strong and stable plan...
Orignal From: 7 steps to retirement plan to a safe and reliable future
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