Retirement and How To Plan For It

By: Michael Millington

Planning for retirement might seem like a daunting task to many. Without the proper research, retirement might seem like it will never be a possibility. With things like bills and debt being a constant inclusion in the life of an adult, saving for retirement does not always seem plausible. Not only can retirement happen, it can be as fulfilling as you want it to be. All it takes is some proper planning, research and debt management. Here we will discuss how to plan for retirement.

 

Retirement Planning

While you may not know when you want to retire, it does not mean you cannot start saving for retirement. Saving for retirement before making a concrete plan of how you will retire will create a saving mindset. When you plan for retirement comes together, you’ll already have savings towards your goal. To plan for your retirement period, multiple aspects of your retirement must be considered.

The first thing to consider is how to pay for your retirement. Funding your retirement can be a lifelong endeavor. While in your working years, saving money in a retirement fund can be the most effective way to contribute to your retirement. While this form of saving is safe and low risk, it can also take a long time to accumulate. The more risky alternative is to invest your money in stocks.

The second thing to consider is what your retirement will be like. Starting to save for your retirement may take a while to hit a stride (as with any plan to save), but knowing what you want your retirement to entail might be the most fun you’ll have in the process. Knowing where you’ll live, if you’ll travel, and what you’ll be spending your money on will be crucial to your ability to save efficiently.

 

Retirement Saving

Once you know the basics of your retirement plan and you’re aware of how much money you will need, you can then plan how you’ll save. If you started saving before planning your retirement then you will have a head start on the process. There are multiple ways to monetarily prepare for retirement. Your workplace may provide you with a 401(k) that allows you to allocate some of your earnings to your retirement, or you may opt to have an IRA (Individual Retirement Account) and take your retirement savings into your own hands.

There are multiple kinds of IRAs that can help you save for retirement. There is the traditional IRA (often known simply as an IRA) and a Roth IRA. The main difference between the two types of IRAs is their impact on your taxes. A traditional IRA will tax any withdrawals that are made at normal income tax rate, while any contributions receive a tax break within the contributing year. A Roth IRA, on the other hand, has no effect on your taxes either way, with contributions receiving no tax breaks and withdrawals generally avoiding being taxed.

A 401(k) is an employer-provided form of retirement that can be made available. The options for a 401(k) are much more limited than an IRA as they are employer run. IRAs are not linked between an employee and employer and can be procured directly from an investment firm by any individual. The contribution limits for each type of retirement fund also differ vastly. Whereas an IRA limits your yearly contribution to $5,500 if you’re under the age of 50 ($6,500 over 50), a 401(k) allows for a maximum contribution of $17,500 if you’re under 50 ($23,000 over 50).

 

Protecting Your Retirement

Having a plan to retire means that you’re a few steps closer to retiring comfortably when you are ready. Once a plan is in place, making sure it is protected is key. Retirement funds, by design, are not infinite. Having unwarranted financial issues whittle away at your retirement funds can be a surefire way to run out of money in your later years. Preparing for your retirement also involves being able to combat any financial barriers that may stand in your way.

If you are paying off a mortgage in your working years, it might be financial sound to finish paying off your mortgage before you reach retirement. Doing your best to reduce the amount of debt you take with you into retirement will help extend the life of your remaining income. Keep credit card usage to a minimum and try to make complete payments on your credit bill every month. Maintaining this habit will help you to avoid incurring interest and making unnecessary payments.

One decision that impacts the entirety of your retirement planning is when you will retire. Many people aim to retire by the age of 65 or sooner if they are financially able (or physically unable to continue working). However, do keep in mind that the later you choose to retire, the more retirement funds you will have to use in your non-working years. Waiting until later to retire will increase the amount of funds you have allocated to you from your social security insurance and you will not feel the need to string out your funds as much.

 

Reaching retirement is a milestone that everyone should be able to enjoy. After working for the majority of your life, retirement should feel like a reward. However, that reward can be taken away by long standing debt. Having debt into your later years can cause just as many problems as any other debt at any other age. Guardian Debt Relief can help with your debt. Give one of our debt professionals a call to receive your free consultation call. We’ve helped thousands of individuals settle their debts and become debt free for less, and we can help you settle yours. Take the first step and contact Guardian Debt Relief today.