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What You Need to Know About Planning for Retirement

Written By: William Rivers
Reviewed By: William Rivers
Published: February 17, 2023
Last updated: March 31, 2023

Planning for retirement is one of the most important things you'll ever do. In fact, it's never too early to start planning for your future, even if you're only in your twenties or thirties. But since most people this age are just starting to gain financial footing, you might not know where to start. In this article, we'll be going over what you need to know about planning for retirement.

Start Saving Now

Retirement isn't something that happens once you reach a certain age. You need to have enough money in the bank to live comfortably. Most people who are federal workers often have a 401k. This is a type of retirement plan that allows you to contribute a set amount of funds on an annual basis. These payments are tax-deferred, so you won't have to worry about losing anything. Though, it's worth pointing out that you will be taxed for other types of payroll.

However, having a 401k isn't the only way to compile funds for retirement. You can start saving a bit of money you earn from your paycheck every month. Using the 50/30/20 method is a fantastic way to put away a set amount. This is when you put 50 percent of your monthly income to the necessary expenses, 30 percent towards splurges, and 20 percent into a savings account.

Calculate Your Retirement Expenses

Saving money is only part of the process; being in retirement doesn't mean we're exempt from our monthly expenses. Unless you have a source of passive income, you only have what you saved. The last thing you want to do is to come out of retirement just to make sure you don't run out of money. To get an idea of what your expenses are, you'll need to calculate them. 

Go over your bank statements to see how much you're spending each month. If you're unsure if you'll have enough leftover, you do have a way to get some fast cash. You can look at refinancing your student loans into a new one, to free up extra funds. This is also a great way to save on monthly expenses as you won't be paying as much when the deadline comes due every month. In addition, cutting the cable cord, cancelling an unused gym membership, or avoiding going out to eat are easy ways to cut additional expenses.

Map Out Your Retirement Goals

You also need to think about your retirement goals. Some may want enough money saved so their home is paid off in full. Others may want to work part-time while being able to live comfortably off what they earn. Remember that retirement is a time where you can do virtually anything you want. However, you'd be surprised how empty it can feel not having any source of structure. Mapping out your goals is key to a successful and comfortable retirement. If you find yourself having a little trouble figuring out goals to strive for, we've got you covered. Here a few simple, yet fulfilling goals you can aim to accomplish in retirement:

  • Paying off their house completely
  • Being a part of a non-profit organization
  • Learning new skills, like speaking a foreign language
  • Picking up new hobbies
  • Getting into investing to earn extra income
  • Prioritizing your health and wellness

It's important to note that these goals can either be short-term or long-term, depending on what you set for yourself. Being a full-fledged homeowner and investing are examples of long-term goals. One of the best ways to plan out your future for retirement is to make SMART goals. SMART is an acronym for specific, measurable, achievable, relevant, and time bound. The specific thing is what the goal is. Measurable is how much you want to see from this goal, such as how much money are you hoping to make from an investment and how long. 

Achievable is simply whether you're able to fulfill the goal in question. The term relevant is used to signify the importance of the goal you have in mind. It's the why aspect of a goal. Finally, time bound is how much time you have to complete your goal. This is coupled with the measurable aspect of SMART goals. An example of this would be wanting to have an ROI of $3,000 within the next year and a half.

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William Rivers is an editor with a master’s degree in Human Services Counseling at Maine State University. He has more than 20 years of experience working in the senior healthcare industry.
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