Retirement Planning Mysteries

Retirement Planning Mysteries

You’ve heard how important retirement planning is. And you know you should really get serious about it. You’ve got a 401k, a savings account and a good job, but you know there’s more to being able to retire comfortably than that. Some retirement planners make income planning for your golden years seem mysterious and complex. So, mostly you hope it will be easier later and wait for a bolt of inspiration.

Several financial aspects play into retirement planning. You do need to continue to:

  • build wealth
  • regularly assess investment risks
  • minimize taxes
  • develop an estate plan
  • and more

So, here are some considerations for working with a retirement planner.

Start Your Retirement Planning Yesterday

Yesterday. The day before. Okay, today, then. The biggest step there is in retirement planning is starting. Do not wait another day. The earlier you start with a retirement planner, the longer your money has to work for you before you retire. Give your investments time to grow. Give the market time to fluctuate. Start with small contributions, then increase amounts as your finances improve.

Retirement planning is a process, not a single event. You start by figuring out how much you need to save for retirement. Then, based on how old you are, you put a plan in place to make it happen. Retirement is not a birthday—it is a financial destination.

Starting now means having a plan. There are many ways you can be successful by accident, but retirement planning is not one of them!

Be Systematic

To ensure your retirement planning doesn’t get off track, create an automatic system for your contributions. Once you have determined how much you’ll need, set up the automatic withdrawals from your current income. Specify an amount saved from each paycheck, so you never forget or get distracted. It is certainly easier to make regular, small investments than to try to set aside large amounts all at once.

In addition, if you receive a tax refund, plan to invest some (or all) of it for your future. Make the decision to apply this “found money” toward long-term savings before it arrives. You may find it more difficult to choose otherwise. 

It is this sort of disciplined, systematic savings that builds more wealth.

Taxes, Taxes, Taxes

The incredible complexity of the US tax code means it is vital to understand all the tax implications of any investment choice. Some accounts have more obvious tax implications like your 401k, IRA, or a private pension fund.

But there are subtleties on how to continue to compound your returns using taxable accounts. Solid retirement plans include taking these accounts into consideration.  

What About the Risks of Retirement Planning?

Portfolio risks like inflation, fluctuating markets and changes in interest rates do exist. Being aware and preparing for the risks allows for smart retirement planning decisions in the long term. And the earlier you start, the longer the term is before you retire.

Starting sooner reduces your risks.

And Then There is Estate Planning

What happens when you die? An estate plan should always be part of your retirement planning. Your estate plan says how your assets are distributed after you pass away. Sure, it might be stressful to think about, but getting everything sorted out does take a load off. Then, you continue your life journey with confidence.

Retirement planning does not have to be full of too much mystery. Find a trusted retirement planner to help you develop a plan for retirement income planning, savings, and investments. Then, you can focus on working hard, building wealth, and living the good life.