Everyone should have a retirement plan in place, because being prepared for retirement does not happen on its own. In many cases, having an IRA along with Social Security benefits will not be sufficient, if you want to retire comfortably. When to start retirement planning can be a concern for many of us. While you should start planning sooner, rather than later, you may not have everything you need to create an effective plan just yet.
The first step is to start saving for retirement
When you hear people say you should start planning for retirement as soon as possible, they are usually referring to saving more so than actual planning. Planning and saving are not the same, when it comes to retirement planning. The first step in a proper retirement plan is to determine the savings method that works best for you. You need to save up money first, so that you will have something to invest, right?
Begin your early planning in your mid-thirties
The initial planning, which is typically not really detailed, should begin in your mid-thirties. Why? Mostly because there will be changes in your circumstances, later in life, that will likely alter your plans. You should start considering, at this point, when you would like to be able to retire. That way, you can begin to estimate how much money you will need to have saved by that time, to make it happen.
Make more concrete goals in your mid-forties
Real retirement planning can begin once you reach your mid-forties, when you have gained a better understanding of your financial situation and can see how realistic your goals were. This is the time to decide whether you want to travel extensively during retirement, where you want to settle down, if you want to stay in one place. This stage is more about establishing goals, as you have a better idea of the amount of money you should have available to you when you retire.
Serious retirement planning should take place in your fifties
Now that you are in your fifties, you can take a serious look at how your investments have been doing. You can start transferring your savings to safer and more stable investments. The growth of your finances will be less important than preserving your capital.
Now is when you consider your eligibility for retirement benefits. The age you begin taking disbursements will have a very specific effect on your retirement plan.
Social Security benefits will likely not be sufficient by themselves
Traditionally, an individual’s retirement was accomplished through employer and government benefits. Now, with the state of social security benefits being somewhat uncertain, more strategic retirement planning is crucial. Also, considering the cost of living and unemployment rates, social security benefits, alone, will most likely be inadequate for the average person to retire on.
Indeed, the original purpose of social security was to provide the minimum standard of living during retirement. So, if you want to be sure your golden years will be as comfortable as you may have hoped, you need to consider adding a retirement plan to your estate planning.
If you have questions regarding retirement planning, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.