Eight Tips to Start Retirement Planning in Your Later Years
Many people go through their earlier years in life without giving much thought to retirement and what their future might hold. But not having a financial retirement plan in place during your later years can lead to great uncertainty in your ability to live comfortably once you leave the workplace.
The Insured Retirement Institute found that only 36 percent of baby boomers are feeling confident they will have a comfortable retirement. While 64 percent believe they will need to take a post-retirement job as an additional source of income.
A recent survey of U.S. employers also showed they lacked confidence in their employees’ readiness to retire. More than 500 U.S. companies representing more than 12 million employees were surveyed by human resource consulting firm Aon Hewitt. The study found that:
- Only 4 percent of employers were very confident their employees will have adequate retirement assets. This is a dramatic shift from 2011, when the same survey found that 30 percent of employers were very confident with their employees’ retirement assets.
- Only 10 percent of employers were very confident employees are taking the accountability needed to ensure retirement success.
- Employers are also questioning the ability of their employees to manage income once they do retire. Only 18 percent felt confident their employees will be able to manage their retirement assets.
Going through life without a retirement plan is a lot like going on a trip without a map or having a final destination in mind. Using a financial adviser to come up with a workable retirement plan is one of the most proactive steps an individual can take toward ensuring a retirement that meets their goals and has their final financial destination in mind.
“Individuals often neglect taking the time to create a long-term strategy for retirement that properly factors in all of their needs,” said Derek Overstreet, president of New Millennium Insurance Services in South Jordan, Utah. “Retirement planning should take into account your particular circumstances and goals for your retirement years.”
It’s never too late to start saving for retirement, even if you are in your 60s. Here are eight tips to jump start a retirement plan in your later years:
- Be aware of your current spending habits and calculate how much money you will need to live comfortably in the future.
- Meet with a retirement planning expert to come up with a strategy that will take into account all of your needs.
- Paying off debt should be a top priority. Once debts are paid off start putting whatever you can toward retirement savings. Even in small increments it will begin to add up.
- Practice living on a budget and eliminate unnecessary spending. When you reach retirement you will need to learn to live on what you have saved and not go beyond what has been budgeted. Practice living on a fixed income now to get used to your lifestyle once you do retire.
- Don’t depend on Social Security benefits. Many believe that Social Security alone will cover their needs; this is often not the case. According to the Social Security Administration, the average monthly check at the beginning of 2012 was $1,230.
- Participate in your employer’s 401k plan for savings. Many employers will match your contribution up to a certain level; take full advantage of this to maximize your return.
- Build your savings in a Roth IRA account, while diversifying your investments in stocks, bonds, mutual funds and more. With the Roth IRA, contributions are made with after-tax dollars and withdrawals are generally tax free. Any transaction done within the account has no tax impact.
- Going from working five days a week to not working at all is major lifestyle change. Consider a phased retirement where you work a couple days each week or just a few months out of the year.
Many have been impacted by the recession with unemployment, a plummeting stock portfolio and major losses in property values. Accept the reality of the current economic situation, but don’t let it deter you from reaching your goals. It may take more time to retire than you originally hoped, but being proactive in your approach will eventually get you there.
Kellie Englehardt is a blogger in Salt Lake City, and blogs on behalf of New Millennium.