The Ultimate Retirement Planning Guide 2021

From 401k to inheritances, planning retirement can be stressful. Find out all you need to know in this retirement planning guide.

What do you hope to be doing when you turn 65?

If you’re anything like most people in the United States, that’s the time to call it a day and head into retirement. There are people who want to work for the rest of their lives as long as health permits, but that’s not advisable. Retirement is good for your overall health and gives you the opportunity to do things you’ve always wanted to do, like traveling the world.

But to make this happen, you need to plan for retirement. In this retirement planning guide, we’re sharing expert insight that will help you.

Let’s get into it.

Identify When You’d Want to Retire

65 is the average retirement age in the U.S. While the vast majority of workers will retire around this age, this doesn’t necessarily mean it will be the same case for you.

Unless you’re in a career, such as a federal job, that has a minimum and maximum age requirement for retirement, you can retire as early as you’d wish or keep working until you drop dead.

If you’re an entrepreneur, for example, no one but your health will stop you from working until old age. Look at Warren Buffet, who at the age of 90, is still running his businesses.

However, when you want to create an effective retirement plan, it’s super important to determine when you’d like to retire. This will, among other things, help you determine when and how much to start saving and investing so that you can be financially well-prepared for retirement.

If you want to retire early, say at 35, you’re going to need a lot more money for retirement. Working with a life expectancy of 79 years, you can see that you’ll have a couple of decades to live. You want to ensure you have enough money to keep you going for such a long time.

For purposes of this article, though, we’re working with the average retirement age in the country.

How Much Money Do You Need to Retire?

You know when you’d like to retire. The next thing to figure out is how much money you’ll need for a comfortable retirement.

The goal is to maintain the quality of life you have right now, if not better. As such, you should be able to keep earning at least what you’re earning right now in retirement. If you’re making $100,000 a year, you should also be able to earn the same when you’re retired. In fact, you should aim to earn more, since rising inflation can reduce the purchasing power of one unit of currency.

The amount of money needed for one to retire varies from person to person. If you ask around, however, you will find experts saying you need anywhere from $1.2 million to $1.7 million to retire comfortably – provided you’re hanging up your spurs at 65 years of age.

In general, though, you want to ensure that you’re making at least 80 percent of your pre-retirement salary, every year. Yes, you might spend less on commuting and other work-related expenses, but you’ll spend more on hobbies, vacations, and other personal interests.

Save for Retirement

Now that you know the amount of money you need to retire, the next goal is to figure out how to start raising that money. The first thing that comes to mind is to save.

Saving is a good start in your retirement planning, but it’s not adequate on its own. You see, you can only save so much.

Let’s say you need $1.7 million to retire and you’re 25 years right now. Working with a retirement age of 65, you have 40 years to save this amount.

Work the math and you realize you need to save $42,500 every year or about $3,500 every month. Is this achievable?

If you’re in a high-income job, it’s possible to save this amount. But if you’re living paycheck to paycheck like most American workers, this is impossible.

The goal, though, isn’t to save the entire retirement amount. It’s to save at least a part of it. There are individual retirement accounts that pay interest, and employer-sponsored plans like 401(k) go a long way.

The earlier you start saving, the greater the chance of meeting your financial goals for retirement.

Investing for Retirement

Saving for retirement is highly recommended, but investing for retirement is arguably the most important thing.

In retirement, you won’t be working. Instead, it’s your money that will be working for you. This can only happen if you start making smart investments early enough.

The big question is, where do you invest?

The stock market is an obvious choice – and it’s a prime one for that matter. As long as you buy the right stocks, you can expect to reap big rewards long into your retirement.

Real estate is also a good investment market, but it’s capital and labor-intensive. When you buy a stock, there’s nothing else to do apart from watching the performance of your stocks. In real estate, though, you might need to be involved in the daily running of your properties.

As you invest, be sure to diversify your portfolio. The last thing you want is to keep all your eggs in one basket.

Consult Retirement Professionals

Planning for retirement might sound easy, but it’s far from it. Or even if it’s easy, executing the plan is the hard part.

This is why it’s essential to get the advice of retirement professionals, like those at
Freedominsurancefinancial.com. They’ll assess your situation, advise you on how to plan for retirement, and even help you make smart investments.

Put This Retirement Planning Guide to Use

Retirement can be one of those things that are certain in life, alongside taxes and death. It’s prudent to prepare for your retirement; otherwise, you’ll be setting up yourself for a miserable life in your senior years. Use this retirement planning guide as a starting point.

Explore our blog for more financial tips and advice.

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